Tesco’s Strong Christmas Sales Boosted by Online Surge

An employee of Tesco Plc unloads groceries from a truck as he prepares a delivery in London, U.K., on Wednesday, Sept. 30, 2020. Covid-19 lockdown enabled online and app-based grocery delivery service providers to make inroads with customers they had previously struggled to recruit, according the Consumer Radar report by BloombergNEF. Photographer: Hollie Adams/Bloomberg

(Bloomberg) -- Tesco Plc recorded strong Christmas sales, helped by a surge in online ordering, as more people celebrated at home in smaller gatherings amid Covid restrictions. The U.K. retailer left its profit guidance unchanged.

  • Britain’s largest grocer said festive-season sales helped drive a 5.6% jump in comparable sales in the 19 weeks to Jan. 9.
  • Unlike smaller rival J Sainsbury Plc, which upgraded its profit forecast last week, Tesco reiterated that its retail profitability will be “at least the same level” this fiscal year as in 2019. This excludes 585 million pounds ($798 million) of tax relief Tesco is repaying to the U.K. government.

Key Insights

  • Tesco is one of the retailers that has been most resilient during the pandemic, given that it sells basic necessities and keep stores open during lockdown.
  • Sales at Tesco grew in all channels, particularly its online division, as customers avoided shopping in stores. In the U.K., online sales growth was more than 80%, equating to an extra 1 billion pounds of sales over the 19-week period.
  • Tesco said the costs of keeping its stores operating safely during a pandemic are increasing incrementally during the latest lockdown and will hit 810 million pounds this year.

Market Reaction

  • Tesco’s shares are up 4.6% so far this year.

Get More

  • Read the statement here.