Tesco reports rise in Q1 sales to £12.4bn

tesco

UK supermarket giant Tesco has today reported a 1.3% year-on-year increas in Q1 sales to more than £12.4bn.

This was helped by a significant growth in online demand, with over 1.3 million orders per week. This marks a two-year sales growth of 81.6% and one-year sales growth of 22.2%.

Ken Murphy, Chief Executive of Tesco said: “We delivered a strong performance in the first quarter, even as we lapped the high demand of last year due to the pandemic. We have further strengthened our commitment to delivering consistent, reliable value and to rewarding loyalty, as we extended Clubcard Prices to all Express stores. Our colleagues continue to do a great job serving our customers, and I thank them for everything they’re doing.

“We remain focused on delivering great value, increasing loyalty and further developing our digital platform so we can serve our customers when, how and where they want. Our profit guidance from April remains unchanged. While the market outlook remains uncertain, I’m pleased with the strong start we’ve made to the year and continue to be excited about the many opportunities we have to create value over the longer term.”

The FTSE 100 firm also announced that its customer satisfaction currently remains ahead of the rest of the ‘Big 4’ supermarket chains.

There was a total of 0.5% growth in the UK (75% of total sales) and 9.2% growth in Wholesale business Booker (13% of sales), offset declines in the Republic of Ireland and Central Europe.

In the UK, online sales grew 22.2% on last year. General Merchandise and Clothing LFLs rose 10.3% and 52.1% respectively.Tesco Bank sales fell 10%.

The shares were unmoved following the announcement.

Industry reaction

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said: “Tesco’s first quarter numbers look sluggish, but that’s because they’re lapping the unprecedented demand triggered by the pandemic this time last year. While Tesco might be catching its breath as it crosses the finish line, the work doesn’t stop there. As we know, Covid has massively accelerated the shift to online, and digital demand is going to remain heightened. Tesco has done an amazing job of ramping up digital capacity, and is outshining some peers. Keeping hold of that momentum will require a near perfect execution of its attempts to build scale.

“There’s a wider read across from these results too – General Merchandise and Clothing seem to be faring very well, albeit they’re starting from a much lower base after the pandemic slashed demand last year. It seems people’s spending patterns are normalising, and not necessarily reining in expenditure despite lingering economic uncertainty. The shakedown in consumer habits hasn’t finished yet, but this early indication could have positive connotations for other retailers.”

James Andrews, senior personal finance expert at money.co.uk, said: “While supermarkets remained a mainstay during the pandemic – it’s not been without substantial expense. However, Tescos resilience despite the high cost of meeting coronavirus requirements is impressive. It’s also shown how sharp increases in online ordering (+22.2%) have affected its business model – with part of that 0.5% spent on new slots and capacity added.

“The outlook statement highlights that Tesco is in no real danger as they continue to maintain their performance on top of last years exceptional sales. However, how they weather the future of the pandemic and lockdown easing will give a clearer indication of where Tesco can compete among other retailers in the market.

“The retailer is also alive to changing shopping habits, with more people doing larger weekly shops – either online or in-store – and fewer customers popping in on the way to or from work as offices closed and flexible working increased.

“Changes announced already include the decision to re-brand all its ‘Metro’ stores as either ‘Express’ or ‘Superstores’ to better reflect how customers use them.

“With fuel sales expected to rise, we can expect a continued strong performance from its larger stores – but competition from budget competitors such as Aldi and Lidl hasn’t disappeared. The following year will be one to watch to see how the company reacts to society opening up, as well as how effective its new price-matching schemes will be.”

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