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Tesco’s profits fell by by a fifth over the past year as £900m of costs relating to coronavirus outweighed surging sales.
The UK’s largest supermarket chain revealed pre-tax profits dropped to £825m in the year to February down from £1.03bn.
Tesco said profits had been reduced by the decision to hand back £585m of business rates relief to the government. The company also booked £892m of Covid-related expenditure including making its stores safer.
Like all supermarkets, Tesco benefited from a jump in sales as non-essential shops and restaurants closed down for much of the year.
Sales excluding fuel rose 7 per cent to £53.4bn for the year, with online shopping accounting for much of the rise.
Online sales rose 77 per cent to £6.3bn in the UK as Tesco doubled delivery capacity to meet rising demand from housebound customers.
Some 16,000 staff taken on during the pandemic were given permanent jobs last year, including 10,000 pickers, who select and pack orders, and 3,000 drivers.
Chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic.
“By putting our customers and colleagues first, we have built a stronger business.
“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.
“We have strengthened our brand, increased customer satisfaction and improved value perception.”