Coronavirus (COVID-19): Tesco announces preliminary results plus latest developments

Date : 08 April 2020

Nick Gladding

Senior Retail Analyst

Tesco has released robust full year results for the year to 29 February 2020, together with an update on how it is supporting customers and colleagues through the Coronavirus (COVID-19) crisis.

Headline results (actual exchange rates, 52 week change)

  • Group sales: -0.7% to £56.5bn
  • UK & Ireland sales: +0.1%, +0.2% LFL
  • Tesco UK: -0.6%, -0.3% LFL
  • Booker sales: +5.0%, +3.3% LFL
  • Central Europe sales: -12.1%, -6.4% LFL
  • Asia sales: +6.7%, -1.9% LFL
  • Group operating profit pre-exceptionals: +13.5% to £3.0bn (excluding amortisation of acquired intangibles)
  • Group margin 4.64% (+56 bps)

Coronavirus (COVID-19) Update

  • Demand has now stabilised across the group a 30% surge in demand across the group in the first few weeks of the crisis (c.+30% uplift in the UK) and sales volumes have returned to more normal levels
  • Colleague absenteeism has been significant due to Tesco's scale and the nature of the pandemic. Tesco has also recruited over 45,000 colleagues in the last two weeks, but 50,000 colleagues have been absent due to the virus
  • Online capacity has been increased by more than 20% and will rise further. 75,000 customers have been prioritised from a Government list of clinically vulnerable and isolated customers
  • Significant changes to the store environment have been implemented to maximise safety to colleagues and customers and to prioritise the needs of the most vulnerable
  • Click here for more details on our new Coronavirus (COVID-19) country update hub page

Key developments in the UK

  • Increased focus on value through '100 years of Great Value' events, the introduction of exclusive prices for 19m Clubcard holders and last month's launch of 'Aldi Price Match'
  • Encouraging initial customer reaction to November's launch of Clubcard Plus which offers 10% off two big shops per month for subscribers paying GB£7.99 (US$9.80) per month
  • Fresh food volumes outperformed the market by 0.5%, supported by a strong food-to-go offer
  • Shift in non-food product mix to categories complementary to food, such as Home and Cook, with plans to grow clothing sales faster in the year ahead
  • Slower H2 online sales growth after strong growth in H1, but capacity is being strengthened for future growth. Tesco's first Urban Fulfilment will open soon in West Bromwich Extra and unmanned click & collect sites are being trialled
  • Commitment to remove all plastic wrapped tinned multi-packs from stores as part of actions to remove one billion pieces of plastic by the end of 2020
  • Good growth from Booker is set to be strengthened by the acquisition of Best Food Logistics in March 2020

Key developments in Central Europe

  • Fundamental reshaping of operations in Poland with the disposal large hypermarkets to complete the transition to a two channel model (compact hypermarkets and supermarkets)
  • Businesses in Czech Republic, Slovakia and Hungary, re-sized, simplified and made more relevant to shoppers
  • 10.1% fall in sales impacted by closure of 28 stores and right sizing of 545 hypermarkets
  • 1% improvement in availability across the region and 20% LFL growth in key 'Star' lines

Key developments in Asia

  • Express proposition rollout and large store reinvention programme is progressing well in Thailand. Two 'ultra-convenient' E-Pop stores now open
  • 'Food Love Stories' campaign and more competitive prices have improved customer perceptions
  • Simplification of non-food ranges impacted headline sales by c.1% during the year
  • In March 2020, Tesco reached an agreement to sell its Asia business to CP Group for $10.6bn. The transaction is expected to complete in the second half of calendar 2020, conditional on shareholder and regulatory approval

IGD Tesco Business Update 2020

New date: 23 October, London

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