Tesco would have preferred the focus of today to have been fixed squarely on its performance in the first quarter of the year, which saw the grocery giant report strong volume growth and an increase in market share as consumer sentiment gradually improved.
But the proposed pay of chief executive Ken Murphy ensured the day did not pass without controversy.
Mr Murphy will receive remuneration of £9.93 million for the retailer’s financial year for 2023/ 24, including a pay-out of £4.91m under the company’s performance share plan, an annual bonus of £3.38m, and fixed pay of £1.64m, according to its annual report. It reflected a year in which Tesco booked an operating profit of £2.82 billion, a 100% rise on the year before, as sales were lifted by the continuing inflation crisis.
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The hefty pay-out will do little to quell critics of the bonus culture in the City, given it comes as thousands of households across the UK continue to struggle with the cost of living crisis.
Indeed, trade union Unite was brutal in its assessment of the pay package. General secretary Sharon Graham declared: “Ken Murphy’s £5m wage increase is a slap in the face to the millions of struggling workers and their families who paid for it through higher food bills.
“The fact is, Tesco has taken advantage of the cost of living crisis to rake in obscene profits, and it is far from the only one.”
City analysts meanwhile underlined the strength of retailer’s start to its current financial year, with Julia Palmer, partner at Begbies Traynor, declaring that it is “testament to its enduring appeal for consumers”
Tesco’s trading to date means the company is on course to meet its profit expectations at least £2.8bn for the full year.
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The retailer revealed today that total retail sales grew by 3.4% to £15.3bn in the 13 weeks to May 25, compared with the same period last year.
This came on the back of a 5% increase in food sales, with high demand for fresh produce helping to drive higher sales volumes. It added that sales of Tesco Finest products were "particularly strong" as shopper demand for premium products grew despite continued pressures on household budgets from higher mortgage and rental costs.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, noted: “Crucially, in the first quarter, volumes continued to grow, which is an important milestone during slowing inflation.
“The emphasis on value for money is evident and has become markedly more pronounced in recent times.”
Shares in Tesco were trading up 2.0% or 6.2p at 308.7p around 16.10pm.
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