A Tesco supermarket in Hatfield, Britain, October 6 2020. Picture: REUTERS/PETER CZIBORRA
A Tesco supermarket in Hatfield, Britain, October 6 2020. Picture: REUTERS/PETER CZIBORRA

London  — Tesco followed supermarket rivals in reporting buoyant Christmas trading on Thursday, keeping its full-year profit forecast despite rising costs from Covid-19.

Britain's biggest retailer said like-for-like sales growth was 6.7% in its third quarter to November 28, accelerating to 8.1% in the six weeks to January 9, as coronavirus pandemic restrictions meant people splashed out on celebrations at home.

“This was our sixth consecutive Christmas of growth and a record performance,” Tesco CEO Ken Murphy said.

“We outperformed the market for each of the six weeks over Christmas and we saw net switching gains from all key competitors,” Murphy, who took over in October, told reporters.

Tesco shares were down 1.4% in London after the update on trading, paring 2021 gains to 3.2%.

Murphy highlighted a 14% rise in sales of Tesco's premium Finest range, with 69-million mince pies and 8-million bottles of champagne and sparkling wine sold.

Tesco's update follows strong holiday shopping reports from the country's second-largest retailer, Sainsbury's, as well as Morrisons and Lidl.

Industry data last week showed supermarkets reported unprecedented demand, with £11.7bn spent on groceries in December.

Coronavirus restrictions mean many people are working from home and the hospitality sector is closed, while many of the 5-million or so Britons who normally travel abroad for Christmas stayed at home instead.

Tesco said sustained elevated sales were enabling it to offset additional Covid-19 costs, such as increased staff absence, that it forecast at £810m in its 2020/2021 year, up from an estimated £725m in October.

Tesco continues to expect to report a loss for Tesco Bank of between £175m and £200m for the year.

Last month, Tesco completed the £8.2bn  sale of its Asian business, paving the way for it to return £5bn  to shareholders via a special dividend.

Murphy also said that Tesco has seen some supply disruption to the island of Ireland since a post-Brexit trade deal with the EU kicked in on January 1.

Reuters

Would you like to comment on this article or view other readers' comments?
Register (it’s quick and free) or sign in now.

Speech Bubbles

Please read our Comment Policy before commenting.