TOP NEWS: Tesco Toasts Record Christmas Amid Premium Products Splurge

(Alliance News) - Tesco PLC on Thursday became the latest UK grocer to boast a "record ...

Alliance News 14 January, 2021 | 8:31AM
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(Alliance News) - Tesco PLC on Thursday became the latest UK grocer to boast a "record Christmas", with the supermarket chain's sales getting a boost from its premium 'Finest' range as well as plant-based products.

The FTSE 100 constituent left its annual profit guidance unchanged, but did raise its Covid-19-related costs forecast to GBP810 million from GBP725 million.

Tesco's group retail sales rose 7.3% at constant currency over the six weeks to January 9, which includes the bumper festive trading period. On a like-for-like basis, sales growth was 5.4%.

The total retail figure includes the contribution of its units in central Europe, though does not include Tesco Bank. Factoring in Tesco Bank, group Christmas sales improved 6.8%.

Over Christmas, the UK & Republic of Ireland retail arm saw total sales growth of 8.4%, or 6.3% like-for-like. The unit also includes the Booker wholesale arm, where total Christmas sales rose 6.7%, but fell 8.3% like-for-like.

Tesco said a strong UK sales performance was sustained in the third quarter as shoppers splurged on the grocer's 'Finest' food products range over the Christmas holiday period.

The Finest range had a 14% sales rise over Christmas, while plant-based products saw a sales surge of 90%.

For the third quarter to November 28, Tesco reported group total sales growth of 7.1%, or a 5.7% rise like-for-like.

For the 19-week period, - Christmas as well as the grocer's financial third quarter - group sales rose 7.0% or 5.6% like-for-like to GBP19.91 billion. Tesco Bank contributed GBP261 million, though this was a 28% plunge from the equivalent period a year earlier.

Tesco expects a GBP175 million to GBP200 million annual loss from its banking arm.

"We delivered a record Christmas across all of our formats and channels. In response to unprecedented demand for online groceries, colleagues delivered over seven million orders containing more than 400 million individual items over the Christmas period," Chief Executive Ken Murphy said.

Tesco said UK sales grew across all formats, channels and categories. Online sales growth was particularly marked at over 80%, equating to nearly GBP1 billion extra sales over the 19-week period.

Looking ahead, Tesco said guidance for the 2021 financial year is unchanged, adding it remains confident that retail operating profit is likely to be at least at the same level as in 2020, excluding the repayment of business rates relief. In financial 2020, Tesco posted retail operating profit of GBP2.81 billion.

However, Tesco increased the estimate of its incremental costs of dealing with the Covid-19 pandemic in financial 2021, such as increased staff absence, to GBP810 million from GBP725 million.

"The strong momentum in the business and the benefits of sustained elevated sales are enabling us to offset the additional Covid-19 costs we are now expecting to incur as a result of the increasing severity of the pandemic since we updated the market in October," Tesco said.

German discount supermarket chain Lidl also reported record Christmas sales. In the four-week period to December 27, overall sales in the UK improved 18% year-on-year, it said on Wednesday.

Rival Aldi also posted a company record, with sales rising 11% in the four-weeks to December 24.

Tesco shares were 1.5% lower at 238.60 pence each early on Monday in London.

By Eric Cunha; ericcunha@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.

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