It’s a hard slog running a supermarket when so many more people have been forced to cook from home instead of going out for meals or picking them up on the go. Like many of its peers, Tesco has done an incredible job keeping its shelves stocked and doing everything it can to boost its capacity to fulfil more online orders.
“The results are laid bare in its latest update which shows decent like-for-like sales growth over the Christmas period in nearly all parts of the business.
“Covid-related costs have gone up, acting as an important reminder that the extra demand for food and drink isn’t all pure profit.
“What’s beneficial to the business is the fact we’re seeing a live stress test play out. If anyone ever questioned whether Tesco could cope under pressure from a significant change in circumstances, the answer is firmly ‘yes’.
“Stress tests tend to be a short exercise, but this one has been playing out for 10 months and it keeps taking a new direction, such as supermarkets now cracking down on the use of face masks and the impact that will have on trade and getting staff to make sure people follow the rule.
“Supermarket workers are under a lot of stress because of the higher demand for products as well as the unfortunate abuse from some customers. Therefore, management deserves a lot of credit for keeping the ship steady.
“Against this resilience, one cannot ignore the problems within Tesco’s wholesale business, Booker. Flat like-for-like sales in the third quarter, weak Christmas trading and a like-for-like sales decline over the past 19 weeks goes to show that some factors are out of Tesco’s hands. Booker is likely to struggle for as long as lockdown restrictions remain in place. And as for Tesco Bank, the less said about it, the better.”