Tesco: Covid-19 having 'material' impact on business

(CercleFinance.com) - Tesco warned on Wednesday that the ongoing Covid-19 outbreak is having a "material" impact on its business, prompting it to incur additional costs, particularly in payroll, as the British retailer recruits new employees to meet rising demand.


Whilst the full financial impact of the crisis for financial year 2020/2021 is "impossible to predict," the supermarket group said it has considered a range of scenarios to understand potential outcomes.

Dependent on the alternatives, the estimated impact should be between 650 million pounds and 925 million pounds, including significant cost increases in payroll, distribution and store expenses, the company said.

However, at this stage, it would not be wise to provide financial guidance for 2020/2021, Tesco said.

In the 53 weeks ended 29 February 2020, group sales fell by 0.7% at actual exchange rates, including a 0.3% foreign exchange translation benefit due to the depreciation of the pound.

In the UK and the Republic of Ireland, total sales increased by 0.1% at actual exchange rates, albeit against a backdrop of subdued market growth, the group added.

Over the period, operating profit before exceptional items and amortisation of acquired intangibles grew by 13.5% to 2.9 billion pounds at actual exchange rates, it said.

The Tesco share was down 3.7% on the London Stock Exchange after this report.

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