Tesco counted the cost of the COVID-19 pandemic as full-year profits fell by a fifth despite “exceptionally strong” sales growth.

Britain’s biggest supermarket group reported pre-tax profits of £825m for the year to 27 February, 19.7% lower than a year earlier even as UK like-for-like sales grew by 7.7% to £39.4bn and online capacity doubled.

That was after Tesco faced COVID-19 costs – including bonuses for staff – totalling £892m and also took a £535m hit on business rates relief handed back to the government.

Tesco said it had won customers “from all key competitors” with especially strong sales growth as customers stockpiled at the start of the first national lockdown last year and again when tighter restrictions were imposed more recently.

The company said it expected some of the sales gains “to fall away as COVID-19 restrictions ease” though expected coronavirus costs of just over £200m will take a smaller chunk out of profits.

Tesco chief executive Ken Murphy said: “Tesco has shown incredible strength and agility throughout the pandemic.

“By putting our customers and colleagues first we have built a stronger business.

“I’d like to say a huge thank you to the entire team for rising so selflessly to every challenge they’ve faced.

“Their efforts have been truly heroic.”

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