Yahoo Finance Tesco enjoys record Christmas but COVID-19 costs hit £810m
Tesco (TSCO.L) enjoyed a record Christmas of sales, delivering seven million orders amid “unprecedented demand” for online groceries.
The UK’s biggest supermarket said in its latest statement its total sales across the group were up 6.8% in the Christmas period, and 7.1% in its third quarter. Revenues in its third quarter to 28 November and the following six weeks to 9 January hit £19.9bn ($27.1bn).
The company said it expected operating profits to be “at least” the same in the 2020-21 financial year as the previous year, excluding the repayment of £585m in business rates relief.
Tesco was the first of a string of supermarkets last month to pay the government back the funds saved under the relief, which had been introduced primarily to support closed ‘non-essential’ retailers.
It said strong momentum and “sustained elevated sales” allowed it to offset the negative impacts of the “increasing severity” of the pandemic since it last updated shareholders in October. It expects to incur extra costs including greater staff absences, taking its full-year estimates for the COVID-19 hit up from a previously forecast £725m to £810m.
It also expects to report losses of between £175m and £200m for Tesco Bank.
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“We delivered a record Christmas across all of our formats and channels,” said CEO Ken Murphy.
“In response to unprecedented demand for online groceries, colleagues delivered over seven million orders containing more than 400 million individual items over the Christmas period.
“Our colleagues went above and beyond, rising to every challenge in the most exceptional of circumstances and I thank every one of them for this.”
The company said Christmas sales were driven by food purchases including a 14% jump in Finest products, “as customers looked for more opportunities to treat themselves.”
Tesco’s festive range of free-from, vegan and vegetarian products was its largest ever, the company said. Sales of plant-based products “increased strongly,” including its Plant Chef range, in the run-up to Christmas.
Tesco has been on a hiring spree during the pandemic, both to meet surging demand and cover staff absences for shielding and sick colleagues. It said it had taken on almost 35,000 extra temporary staff over Christmas.
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