Tesco profits plummet 20% despite surge in grocery sales

Tesco profits fell by a fifth over 2020 as surging grocery sales were offset by around £900 million in coronavirus costs.

The retailer reported pre-tax profits of £825 million, a decline of nearly £200 million from the previous year.

The Covid-related costs came largely from temporary closure of shops and self-isolating employees, who received full pay.

Tesco Bank did not make any profit at all, suffering an operating loss of £175 million.

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Stores in central Europe saw the biggest relative fall in operating profit, which dropped by 30 per cent, and a slight decline in sales.

However, sales grew to around 9 per cent in the UK and Ireland.

The Big 4 grocer took advantage of the e-commerce boom by doubling its weekly delivery slots to 1.5 million in slightly over a month, reporting a 77 per cent year-on-year increase in online sales.

“We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform,” Tesco chief executive Ken Murphy said.

“We have strengthened our brand, increased customer satisfaction and improved value perception.

“While the pandemic is not yet over, we’re well-placed to build on the momentum in our business.”

Last December, Tesco paid back the £585 million in business rates relief provided by the government to help it through the pandemic.

At the time, the retailer projected that coronavirus measures would cost £725 million – underestimating the final figure by some £170 million.

FinanceSupermarkets

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