Tesco sales soar as online business booms

Tesco saw sales surge in the first quarter of trading, with like-for-like sales up 8.2% despite the pandemic and nationwide lockdown. 

In the quarter ended 30 May, total sales were up by 9.2%, while online sales soared by 48.5% as more shoppers shifted online. 

The group doubled its online capacity in a five-week period, and is now delivering over 1.3 million orders per week. Across the quarter, the group delivered a total of 12.6 million orders, with its online grocery business growing from 9% to over 16% of its total UK sales. 

The supermarket’s convenience business also saw sales up by 9.5%, including a “particularly strong” performance from its One Stop estate.  

Meanwhile, sales across its large stores were up by 5.4%, with stores “well-placed” to serve customers who were shopping “less frequently” but buying more on each visit. 

Customers also focused their purchases on essential items during the period, with food sales up by 12%, while clothing sales plummeted by 20%.

In the group’s first quarter update, it noted that Covid-19 led to a “substantially” increase in costs, the majority of which related to payroll.

This included the provision of twelve weeks’ paid leave to 26,000 vulnerable workers, as well as the recruitment of 47,000 temporary employees to cover absence and meet increased demand.

The provision of safety-related consumables and PPE resulted in a loss of £65m. In total, its latest estimate of incremental costs for the full year is a loss of £840m.  

However, these costs are set to be “partially mitigated” by a UK business rates relief of £532m and the contribution from additional food sales. 

Dave Lewis, CEO of Tesco, said: “Through a very challenging period for everyone, Tesco colleagues have gone above and beyond, and I’m extremely proud of what they’ve achieved.  

“Their selfless efforts, combined with our embedded strategic advantages in stores and online, have helped to ensure that everyone can get the food they need in a safe environment.”

He added: “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. 

“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.”