Tesco hails ‘record’ Christmas as online sales jump 80% – but warns Covid will cost it over £800m this year
- Tesco’s UK like-for-like sales rose 8.1% in six weeks to 9 January
- It saw 80% rise in online sales in 19 week period after ‘unprecedented’ demand
- Pandemic to cost it an extra £85m, taking total for the year to £810m
Tesco hailed a ‘record’ Christmas thanks to an ‘unprecedented’ boom in online sales, but warned Covid-19 related costs would jump by more than £800million this year.
Britain’s biggest supermarket said demand for its ‘Finest’ range helped UK like-for-like sales rise 8.1 per cent during the six weeks to 9 January as customers treated themselves during the festive season.
Sales for the wider 19 week period rose by 7.2 per cent. However, it now expects the pandemic to cost it an extra £85million, taking the total estimate to £810million for the full-year.
‘Record’ Christmas: Tesco said it delivered seven million Christmas orders, with online sales growing by more than 80 per cent over the 19 weeks
Tesco shares dipped 1 per cent to 239p in early trade on Thursday.
The supermarket said it delivered seven million Christmas orders, as ‘unprecedented’ demand for online groceries helped online sales growing by more than 80 per cent over the 19 weeks.
Sales of its deluxe range ‘Finest’ soared 14 per cent, with vegan options also flying off the shelves as sales of plant-based products rose more than 90 per cent in the run-up to Christmas.
In a stock market update, Tesco said its large stores have seen sales grow strongly as customers favour bigger but less frequent shopping trips.
But its wholesale arm, Booker, has been hit by lockdowns, with sales falling 8.3 per cent in the period as restaurants, cinemas and bars were closed.
In the update to the stock market, the supermarket also said its ‘comprehensive preparations and our strong relationships with suppliers’ have allowed it to maintain strong levels of availability during the Brexit transition period.
Chief executive Ken Murphy said Tesco’s performance over Christmas was ‘market-leading’.
‘Our focus on looking after our customers, including delivering record availability, robust safety measures and great value, has enabled us to maintain strong momentum through the Christmas period, outperforming the market every week,’ he said.
‘We delivered a record Christmas across all of our formats and channels.’
What analysts say
Richard Hunter, head of markets at interactive investor, said: ‘Tesco has completed the set of supermarkets which enjoyed the festive break, partly driven by a further spike in online sales.’
In demand: Sales of Tesco’s ‘Finest’ product ranges rose 14 per cent
He added: ‘The trend towards online purchases by consumers is one which is likely to be maintained post-pandemic, and Tesco has shown that it is ready for the onslaught.’
Chris Daly, chief executive of the Chartered Institute of Marketing believes Tesco is better positioned than rivals to succeed in the long term.
He said: ‘Tesco has followed its Big Six rivals with strong sales growth over the Christmas period. And while the short term profits from these increased sales will be held back by the costs associated with Covid-19, including establishing its online offer – doubling its delivery slots, and creating thousands of new jobs to meet increased demand – it is better placed to succeed long-term than its competition.’
Neil Shah, director of research for Edison Group, said: ‘Investors will be happy with the announcement however, going forward they will be keeping a close eye on costs associated with the virus as well as further improvements on the online experience and delivery processes as the UK national lockdown continues.’