Tesco sales jumped 30% in the first few weeks of the coronavirus outbreak as shoppers stockpiled in the run-up to the lockdown but additional costs involved in feeding the nation could reach almost £1bn.
The UK’s biggest supermarket group said the full financial impact of the crisis this year was “impossible to predict” but that extra payroll, distribution and store expenses could add anywhere between £650m and £925m to costs.
Dave Lewis, the chief executive, said: “Initial panic-buying has subsided and service levels are returning to normal. There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK business rates relief.”
The supermarket said the stockpiling had cleared the supply chain of certain products but supply levels had now stabilised, with more normal sales volumes being experienced. The UK’s biggest private sector employer said no member of staff had been furloughed but 50,000 staff were currently absent on full pay. In the last fortnight the company said it had recruited more than 45,000 people to keep its shelves full.
Britain’s largest banks have agreed to scrap almost £8bn worth of dividends in light of the coronavirus crisis but Tesco said it was going ahead with a final dividend payment worth £635m – making the total payout to shareholders about £900m this year.
Lewis pointed to its strong performance in the year to 29 February, when it banked a pre-tax profit of £1.3bn on sales of £56.5bn and the fact that its investors had suffered lean years during its recent turnaround.