Cost of living: Tesco ‘inflating prices a little bit less and a little bit later’ than the competition
The boss of the UK’s biggest retailer says it is “inflating prices a little bit less and a little bit later” than the competition as families’ budgets are squeezed.
Tesco chief executive Ken Murphy made the claim as the chain revealed first half profits that reflected, it said, its decision to maintain the best value possible for the customer as the cost of goods spiked amid the cost of living crisis.
Underlying retail operating profits fell 10%, the company said, to £1.25bn for the six months to 27 August.
It warned that, as a result of “significant” inflation pressures and consumer caution, annual profits would likely be at the lower end of its earlier guidance of between £2.4bn and £2.5bn by the same measure.
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It reported that shoppers were trading down to own label products and frozen food, and buying fewer non-food products .
Tesco said contributing to that profit guidance too was a decision to freeze prices on more than 1,000 everyday goods.
It also revealed a second pay rise of the year for its staff amid pressure from unions which had declared that the UK’s grocery market leader had slipped behind rivals.
Shopworkers’ union Usdaw said that Tesco’s hourly-paid retail and customer fulfilment centre staff would receive an additional 20p per hour increase from 13 November, taking the base rate from £10.10 to £10.30 per hour.
This was on top of an increase in July of 5.8%, taking the overall increase this year to 7.85%, it said while welcoming the move.
Tesco, like Sainsbury’s, Asda and Morrisons, have been battling since the financial crisis a challenge to their dominance from discounters Aldi and Lidl.
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‘Inflation is going up across the economy’
Industry data from Kantar Worldpanel last month showed Aldi had overtaken Morrisons as the fourth largest chain by market share.
Tesco recorded UK like-for-like sales growth of 0.7% over the six months – recovering from a 1.5% decline in the first quarter – potentially reflecting a greater desire by shoppers to rein in their spending outside the home as energy and other costs surge.
Mr Murphy told investors: “We know our customers are facing a tough time and watching every penny to make ends meet.
“That’s why we’re working relentlessly to keep the cost of the weekly shop as affordable as possible, with our powerful combination of Aldi Price Match, Low Everyday Prices and Clubcard Prices, together covering more than 8,000 products, week in, week out.”
“By staying laser-focused on value and sticking to our strategy of inflating a little bit less and a little bit later, our price position has got even more competitive,” he added.
Shares – down by more than a quarter in the year to date – fell by 1.5% at the market open.
A financial wellbeing platform which counts the alcohol-free beer producer Lucky Saint among its clients has landed a £6m funding injection from a syndicate of well-known investors.
Sky News understands that Mintago, which was founded in 2019, will announce in the coming days that Guinness Ventures has jointly led the Series A round alongside Seed X Liechtenstein and Social Impact Enterprises.
Mintago, which also counts car rental firm Avis and Northumbrian Police among its customers, aims to help employees save and manage their money more effectively.
A number of the start-up’s current investors, Love Ventures and Truesight Ventures, are also understood to have reinvested as part of the fundraising.
The company, which counts Lucky Saint and Avis among its users, has finalised a Series A funding round
The company was set up by Chieu Cao and Daniel Conti, and claims to offer more salary sacrifice schemes than any other UK provider.
It also provides independent financial advice, a service for finding lost pension pots, retail discounts and GP services.
“We realised that organisations are crying out for the same help we provide their staff,” Mr Conti said.
“The benefits of providing that support impact everyone.
“When a company improves their salary sacrifice benefits engagement, they can save thousands in National Insurance Contributions, but their employees save too, easing the strain on their finances.”
The new capital will be used to develop additional products using artificial intelligence, according to the company.
“Mintago is enabling its customers to become truly people-centric organisations by giving them the tools to support their employees’ financial wellbeing,” Mathias Jaeggi, a partner at Seed X Liechtenstein, said.
Business
iPhones sold in US will no longer come from China – as Apple reveals impact of Trump’s tariffs
Apple says devices sold in the US will no longer come from China, as the tech giant tries to mitigate the impact of Donald Trump’s tariffs.
Most iPhones will be sourced from India instead, with iPads coming from Vietnam, to prevent dramatic price rises for American consumers.
Unveiling financial results from January to March, the company said the US president’s escalating trade war has had a limited impact on its performance so far.
However, Apple CEO Tim Cook believes the tariffs will add £677m in costs during the current quarter – assuming Trump’s policies don’t change.
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How Trump 2.0 changed the world
Revenue for the first three months of the year stood at £71.8bn, with earnings of £18.6bn also beating analyst expectations.
High demand for iPhones during this period may have been driven by US shoppers rushing to make purchases before the new tariffs came into force.
But the full impact of any panic buying will only emerge when Apple reports its results from April to June later in the year.
Apple’s reliance on Chinese factories to manufacture its iPhones meant the company was far more exposed to the impact of Trump’s trade war than others.
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Trump: Tariffs making US ‘rich’
After the president unveiled plans to impose reciprocal tariffs on dozens of countries – now largely paused for 90 days – Apple’s stock plunged by 23%, wiping out £582bn of value.
While its share price has recovered slightly, it remains 5% lower than before “Liberation Day”.
Growing tensions between Washington and Beijing are also having an impact on Apple’s sales in China, which fell 2.3% between January and March.
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Addressing the planned changes to manufacturing, Mr Cook added: “We have a complex supply chain. There’s always risk in the supply chain. What we learned some time ago was that having everything in one location had too much risk with it.”
Devices sold outside of the US will continue to be made in China.
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