Tesco profits tumble but City finds reasons to be cheerful

Britain’s biggest grocer found it heavy going amid a struggling economy that showed zero growth in February, writes James Moore

Shoppers paid more for less in Tesco last year as it made £1bn profit despite inflation (PA)

What a tangled web Tesco weaves. Britain’s biggest supermarket reported a slump in pre-tax profits, which fell by more than half to £1bn.

It also reported operating profits of £1.5bn, down about 40 per cent, and “adjusted” operating profits, which were down by only 7 per cent to £2.6bn. A note to the accounts says the adjusted figure excludes “adjusting” items; these add up to over £1bn and include things such as financing costs and “non-cash items”.

The City has bought into the “adjusted” number; the grocer’s performance was a tick or two above what analysts had expected and shares, which have been doing rather well of late, inched higher.