Fresh food volumes outperformed the market by 0.5% supported by a strong performance in the food to go offer. The opening of 18 Express stores has also allowed for a wider fresh food offer.
Prior to coronavirus taking centre stage in the UK, Tesco announced a final dividend of 6.50p per share reflecting the strength of last years performance. Tesco state that they are well placed to serve all stakeholders throughout the coronavirus outbreak.
Tesco is experiencing significant increases in costs due to COVID-19, especially those relating to pay roll. If normal circumstances resume in August, Tesco is estimating the outbreak will have cost them in between £650-£950 million, some of which will be offset by increases in volume of food sold, 12-month business rate relief in the UK and prudent operations management.
Tesco stated their priority in dealing with the exceptional circumstances posed by COVID-19 is to ensure the safety of customers and colleagues, support suppliers, and maintain the availability of food. This has brought specific challenges across the group such as significant changes in customer buying behaviour, the impact of the virus on colleagues and helping the vulnerable in society.
To deal with the changes in purchasing behaviour, Tesco has placed limits on products of 3 per customer but state some of these are now being lifted as stock levels stabilise. According to Kantar, the peak of the sales occurred between Monday 16 and Thursday 20 March with an additional 42million shopping trips.
Online grocery delivery capacity has increased by 20% over the past few weeks, however, Tesco state that is not enough to keep up with demand. It has therefore prioritised deliveries and store opening hours to the elderly and vulnerable, as classified by the UK government, in addition to hiring 45,000 new employees.
Dave Lewis, Chief Executive, states: “Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders.
These endeavours put us in a strong operational and financial position to deal with the challenges of COVID-19. I would like to thank Tesco colleagues for their contribution to this turnaround journey and for their unbelievable commitment as we face into the COVID-19 crisis. Their contribution continues to be immense.”