Jun 26, 2020

Tesco profits flat despite sales surge

The surge in online shopping and closure of restaurants and pubs has done little to boost Tesco, which said it expected operating profits to be broadly level with last year. In a trading update ahead of its annual meeting later on Friday, the UK's largest supermarket chain said increased costs and a reduction in catering industry business at its Booker wholesale operation would offset the effects of higher retail sales and a business rates holiday in the UK. "At the peak we had 52,000 colleagues absent," said Dave Lewis, chief executive, adding that even by the end of the quarter 32,000 were still off work, mostly because they were self-isolating or were classed as vulnerable. Sales were 48 per cent higher than in the same period a year ago and now account for 16 per cent of the total. "The flexibility of our online model with very low capex is a distinct competitive advantage," said Mr Lewis, who predicted that online sales could reach £5.5bn this year. That helped overall sales in the continuing business, which excludes the Asian and Polish units, rise by 8.7 per cent on a same-store basis.

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