Shares of Tesco plc (LON: TSCO) are down roughly 5.0% on Wednesday after the largest British retailer said its adjusted operating profit in fiscal 2023 will slide due to inflation and new investments. On CNBC’s “Squawk Box Europe”, Waverton’s Tineke Frikkee said:
Tesco’s decided right that they’ll increase prices a bit but not as much as inflation. So, they’re going to take a hit to profits for the UK grocery retail as guided to be below what it was.
Fiscal 2022 results were strong
The dovish guidance overshadowed its strong results for fiscal 2022. Revenue came in better-than-expected, resulting in a YoY pull up in pre-tax profit. Frikkee added:
Results were actually fine but that we don’t care about anymore. We look forward. Tesco recently also announced a pay deal for its staff; the increase is over 5.0%. So, they have rising costs but they can’t increase prices of their goods to the same level.
The stock is now down more than 10% for the year.
Full-year results, share repurchase, and dividend
Tesco also reiterated its commitment to repurchasing £750 million ($975.1 million) worth of its own stock. The British multinational said its full-year pre-tax profit printed at £2.03 billion versus the year-ago figure of only £636 million.
Revenue including fuel jumped from £57.9 billion to £61.3 billion versus a slightly lower £61.2 billion expected.
The board declared 10.90 pence of dividend for the year – a 19% annualised increase.
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