Tesco has reported a record Christmas across its business but warned annual coronavirus-related costs are on track to hit £810m.
The UK’s largest retailer which, like rivals, has benefited from its essential status during the COVID-19 pandemic, said it outperformed the market during each week of the crucial festive season.
It revealed a 6.1% rise in comparable sales over the 19 weeks to 9 January, rising to 8.1% in the Christmas period with food sales accounting for the bulk of the increase.
Tesco said it delivered 400 million items to customers over Christmas
The industry has invested heavily in delivery capabilities during lockdown and other coronavirus restrictions.
Tesco said it completed seven million online orders over the Christmas season with sales up by more than 80% over the 19 weeks.
But it reported that COVID-19 costs, including from an increased level of staff absences, continued to prove a drag on profitability.
It said that it expected the cost burden for its current financial year to March to top £810m – an increase of £85m on its last estimate.
The retailer also moved to reassure customers that, on top of the pandemic disruption, it was also navigating Brexit shifts to its distribution network by reporting “strong levels of availability” in supplies.
Tesco maintained its guidance that it expected 2020-21 retail operating profit before exceptional items to come in at least the same level as 2019-20.
But it said that guidance excluded the impact of a repayment of £535m in business rates relief that was promised by the chain in early December.
Ken Murphy took over at Tesco last year
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.
“We delivered a record Christmas across all of our formats and channels.
“In response to unprecedented demand for online groceries, colleagues delivered over seven million orders containing more than 400 million individual items over the Christmas period.
“Our colleagues went above and beyond, rising to every challenge in the most exceptional of circumstances and I thank every one of them for this.
“We’re in great shape to keep delivering in 2021 and beyond.”
Shares slipped fractionally at the market open despite Tesco’s performance over Christmas mirroring one of sales growth reported by the wider supermarket sector.