Tesco has reported a rise in group adjusted operating profits for 2024/25 - to £3.128billion - but warns those profits are expected to slip this year.
The retail colossus saw profits jump by around 10% last year, but cited growing "intensity" of competition for a more subdued forecast.
In an update issued this morning, the supermarket giant said: "In the last few months, we have seen a further increase in the competitive intensity of the UK market. We are committed to ensuring that customers get the best value in the market by shopping at Tesco and we see further opportunities to protect and strengthen our competitiveness.
"We are therefore providing guidance that gives us flexibility and firepower to be able to respond to current market conditions.
"As a result, for FY 25/26, we expect group adjusted operating profit of between £2.7billion and £3billion (FY 24/25: £3.128billion). We continue to expect free cash flow within our medium-term guidance range of £1.4billion to £1.8billion."
Ken Murphy, Tesco chief executive, said: "Our continued focus on value and quality, coupled with market-leading availability, has contributed to another year of increased customer satisfaction and our highest market share for nearly a decade.
"We have invested in bringing great prices to our customers throughout the year, and continued to innovate with over 1,600 new or improved products including 400 new Finest lines, where overall sales grew 15%.
"We are also making significant progress on our long-term growth opportunities, further enhancing our digital capabilities with increased personalisation, further improvements to our online experience and an expanded retail media offering.
"None of this would be possible without the dedication of our 340,000 colleagues and I want to thank them for all their hard work. We continue to invest in our market-leading package of colleague benefits, including over £900million in pay increases across the last three years.
"Building on our strong financial performance, robust balance sheet and positive momentum, we are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market.
"Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and see further opportunities to strengthen our competitiveness. By putting customers first, we will continue to create sustainable value for every stakeholder in Tesco."
FTSE 100
The UK's flagship share index, the FTSE 100, was up 281-points at 8,066 shortly after opening this morning.
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