Tesco ended the business year with a significant loss

The decrease in Tesco’s income occurred despite the fact that in the 2023 business year, the net sales of domestic sales decreased by only HUF 1.6 billion, which fell from HUF 720 billion to HUF 718.7 billion. However, the decline despite the inflationary environment shows that the company’s financial results were not favorable.

One of the main reasons for Tesco’s loss is that hypermarkets, which are located on the outskirts of major cities, are at a disadvantage compared to smaller stores closer to city centers. People’s purchasing power has decreased and nearby smaller shops have been favored. Zsolt Pálinkás, CEO of Tesco Magyarország, said that in the current economic environment, discount stores and smaller stores have an advantage because they are closer to customers.

The special retail tax also placed a significant burden on Tesco, which cost the company HUF 25 billion. A significant part of the company’s turnover comes from non-food products, and in the inflationary environment, people spent primarily on food, so the demand for non-food products decreased.

Rising energy prices have also hit Tesco hard, as the company has a large property portfolio, resulting in higher energy costs. The price cap and the losses related to the mandatory promotions also contributed to the company’s negative results.