TSCO Tesco Plc

By Elena Vardon

Tesco PLC on Thursday said that it expects broadly flat retail profits in the year ahead, beating expectations, as it reported results for fiscal 2023 that were largely in line with views.

The British grocer sees retail adjusted operating profit for fiscal 2024 at around the same level as the 2.49 billion pounds ($3.11 billion) it reported for the year ended Feb. 25.

The guidance looks like an incremental positive given subdued expectations from selling, general and administrative expenses inflation, Citi analysts said in a note, adding that the outlook was ahead of consensus forecasts.

Tesco also guided for retail cash flow to be within its target range of GBP1.4 billion to GBP1.8 billion and Tesco Bank's adjusted operating profit to be between GBP130 million and GBP160 million.

In fiscal 2023, the company's group adjusted operating profit--its preferred metric, which strips out exceptional and other one-off items, and includes its banking branch in addition to retail--was GBP2.63 billion, ahead of the GBP2.61 billion expected by a company-compiled consensus but below the previous year's GBP2.83 billion. Looking ahead, consensus had expected a drop to GBP2.58 billion in fiscal 2024 before a recovery in fiscal 2025 at GBP2.77 billion.

Meanwhile, the FTSE 100 company said its pretax profit halved to GBP1.00 billion in fiscal 2023 as it booked higher impairment charges related to its properties. Revenue including fuel rose to GBP65.76 billion from GBP61.34 billion, while consensus had expected GBP65.72 billion. Group sales, which exclude fuel, came in at GBP57.66 billion, up from GBP54.77 billion. For retail, like-for-like sales rose 5.1% as volumes held up despite cost-of-living pressures, it said.

The board declared a final dividend of 7.05 pence a share, bringing the total payout for the year to 10.90 pence, in line with the previous year. It said it would buy back GBP750 million in shares over the next 12 months.

At 0812 GMT, shares were up 4.3 pence, or 1.6%, at 271.7 pence.

Write to Elena Vardon at elena.vardon@wsj.com

(END) Dow Jones Newswires

April 13, 2023 04:31 ET (08:31 GMT)

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