The company said that its pretax profit for the year to February slid to 825 million pounds ($1.14 billion), compared with just over 1 billion pounds the previous year.
Profits were weighed down by 892 million pounds worth of COVID-related costs, including the need to hire staff to cover for workers impacted by the virus. Tesco said it hired almost 50,000 temporary workers during the pandemic, about 20,000 of whom have joined the retailer permanently. The company also had higher costs related to making sure its stores were safe
Like others, Tesco benefited from a jump in demand for groceries during the pandemic, with more meals eaten at home amid restrictions on the hospitality sector and changes to working habits.
In its full-year results statement, Tesco said its sales excluding fuel increased by 7% to 53.4 billion pounds, with online sales jumping by 77% to 6.3 billion in the U.K. as the company doubled delivery capacity to meet rising demand from housebound customers.
“Tesco has shown incredible strength and agility throughout the pandemic," said Chief Executive Ken Murphy. “While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.”
Tesco's share price fell around 1.5% following the update as some investors were disappointed by its earnings guidance. Tesco said its “best estimate at this stage" is that its retail operating profit will recover to a similar level as in the 2019-20 financial year, the year before the pandemic.
“We suspect that may turn out to be an overcautious forecast, but as things stand it has clearly left the market disappointed,” said Nicholas Hyett, equity analyst at stockbrokers Hargreaves Lansdown.