Covid-19: Tesco says panic buying caused 30% increase in sales

The UK’s largest retailer Tesco said today (8 April) that the race by consumers to purchase groceries in the early part of the Covid-19 coronavirus crisis resulted in a 30% increase in its UK sales.

Issuing a coronavirus update alongside the publication of its interim results for the full year, the grocer said sales levels have now stabilised after what it described as “significant panic buying”, which "cleared the supply chain of certain items".

Tesco said it is still urging consumers to do most of their shopping in store, as it directs its home shopping efforts towards serving the most vulnerable in society.

Grocery home shopping capacity has been ramped up by more than 20%, and Tesco said it will continue to increase this, but it added that 85%-90% of all food bought will require a visit to a store.

Dave Lewis, CEO of Tesco, commented: “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.

“Initial panic buying has subsided and service levels are returning to normal.”

Lewis added there are “significant extra costs in feeding the nation at the moment”, although he acknowledged they are partially offset by the UK business rates relief.

Tesco said the full financial impact of the crisis for the 2020-21 financial year cannot be predicted with a high degree of certainty, so it is not providing full-year guidance. Dependent on the various scenarios ahead, the estimated cost of the crisis for Tesco is between £650 million and £925 million due to extra payroll, distribution and store expenses incurred.

It added, however, that 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, and business rates relief.

These updates came as Tesco reiterated its half-year statement that its turnaround is complete after several years of structural change. It said it was well-placed to serve all its stakeholders as CEO Lewis prepares to hand over the reins to Ken Murphy in the autumn.

Group sales for the 12 months to 29 February were down by 0.7% to £56.5 billion, with operating profit before exceptional items up by 13.5% to £2.96 billion. Pre-tax profit was down by 18.7% to £1.3 billion.