Tesco reported strong growth in sales in its FY22/23 preliminary results, although reported weaker profits and warned it expects no annual profit growth next year as inflation remains a burden.

Revenue came in at £65.8 billion, up 7.2% on last year as volumes were able to hold up well despite the cost-of-living crisis. However, operating profit declined 40.4% to £1.5 billionn as Tesco’s invested in its customer offer, such as its Aldi price match and clubcard prices. The retailers profit before tax halved to £1 billion.

The supermarket stated it will continue to prioritise investment in its customer offer to offset ongoing elevated cost inflation, although anticipates adjusted operating profit in 2023/24 to be broadly flat as it continues to battle with inflation.

“It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help.  Our results reflect our continued investment in delivering great value and quality for our customers, whilst at the same time looking after our colleagues,” commented Ken Murphy Chief Executive.

UK consumers are continuing to be affected by stubbornly high inflation, as it increased to 10.4% in February, breaking three consecutive months of declines.

This has caused some customers to switch to discount retailers such as Aldi or Lidl, however, Tesco sales have remained resilient thus far, reporting like-for-like sales in Q4 rising 7.6%.

Tesco shares gained 1.35% at the open.