Supermarket Tesco (TSCO) fell 1.5% to 238.5p as it reported a strong UK sales performance in its third quarter but was hit by rising coronavirus costs and struggles in its Booker wholesale and Tesco Bank divisions.
Today’s statement revealed like-for-like growth of 6.7% to £14.7 billion in the 13 weeks to 28 November. The company said like-for-like sales in Christmas trading rose 8.1%.
ONLINE SHOPPING JUMP
Online sales growth was particularly good jumping 80%, equating to nearly £1 billion extra sales over the 19-week period.
Chief executive Ken Murphy said: 'Our focus on looking after our customers, including delivering record availability, robust safety measures and great value has enabled us to maintain strong momentum through the Christmas period, outperforming the market every week.’
This focus on looking over customers and staff has brought with it extra costs – up £85 million on previous guidance to £810 million.
This explains why full year profit guidance is only a smidgeon above the previous year despite the boost to sales from the pandemic.
LITTLE MEANINGFUL MERIT
Shore Capital analyst Clive Black commented: ‘Tesco, has done well in the UK supermarket scene but despite the statement of ‘outperforming the market every week’ it has not shot the lights out with nineteen week like-for-like sales in the UK up by 7.2%, a little behind our expectations.
‘We sense that the market will take this update in its stride, particularly in light of the upgrades that came through from Sainsbury’s (SBRY).
‘However, whereas Sainsbury’s has been boosted by Argos, Tesco has witnessed greater headwinds than we anticipated from Booker in the UK, where lockdowns have been weighing heavily upon the Catering side of the business, whilst the independent trade has been a little less robust than lockdown 1.0.’