Tesco has said that “significant panic buying” in recent weeks cleared its supply chain of certain items, with sales jumping by around 30%. It said supply has now stabilised across the group and “more normal sales volumes are being experienced”.
Chief Executive Dave Lewis added
“COVID-19 has shown how critical the food supply chain is to the UK and I’m very proud of the way Tesco, as indeed the whole UK food industry, has stepped forward.
In this time of crisis we have focused on four things; food for all, safety for everyone, supporting our colleagues and supporting our communities.
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.
Tesco is a business that rises to a challenge and this will be no different. I would like to thank colleagues for their unbelievable commitment and customers for their help and understanding. Together, we can do this.”
Tesco said that COVID-19 is having a material impact on the operations of its business and they are incurring significant additional costs, particularly in payroll as they recruit additional colleagues to meet demand and cover the work of those colleagues who are absent and being paid.
“Whilst the full financial impact of the crisis for 2020/21 is impossible to predict with a high degree of certainty, we have considered a range of scenarios to understand potential outcomes on our business and plan appropriately. Dependent on the scenario, the estimated impact on our retail cost lines is between c.£(650)m and c.£(925)m including significant cost increases in payroll, distribution and store expenses.
At this stage it would not be prudent to provide financial guidance for 2020/21, however if customer behaviour were to return to normal by August it is likely that the additional cost headwinds incurred in our retail operations would be largely offset by the benefits of food volume increases, twelve months’ business rates relief in the UK and prudent operations management.”