Tesco sales bounce amid lockdown spending spree
Tesco said its sales for the first quarter rose almost nine per cent in the UK, as shoppers stocked up on essentials and hunkered down during the pandemic.
Underlying sales in the UK rose 8.7 per cent in the 13 weeks to the end of May, reaching £9.9bn.
It maintained its outlook on profit, saying that it expects income for the full year to be more or less the same as in 2019/20 as capital expenditure rises in tandem with sales.
In total, Tesco’s latest estimate of incremental costs for the UK for the full year was £840m. It said costs will be “partially mitigated” by the UK business rates relief of £532m, and additional food sales.
The retailer added it had been forced to make more provisions for an anticipated influx of bad debts at Tesco Bank based on “updated macro-economic assumptions”. It forecast a loss of up to £200m this year for the bank.
While in the UK shopping frequency dropped 32 per cent as Brits stayed at home, the average transaction size rose by 64 per cent.
Online sales in the UK rose an average of 48 per cent over the quarter, including a 91 per cent jump in May alone. Tesco said it had increased its home delivery slots from 600,000 to 1.3m per week, taking its costs for digital to £4m.
“In just five weeks, we doubled our online capacity to help support our most vulnerable customers and transformed our stores with extensive social distancing measures so that everyone who was able to shop in store could do so safely,” said chief executive Dave Lewis.
“The costs of doing this have been significant and only partly offset by business rates relief and increased volume. We see the balance as an investment in supporting our customers at a time when they need it most.”
The recent sale of its Polish business is expected to complete this financial year, while the offloading of its Malaysian and Thailand businesses are expected to complete in the second half of this year after being approved by shareholders in May.