The UK’s biggest supermarket chain said UK sales at established stores rose 8.7% in the three months to 30 May with sales of food increasing by 12% while clothing sales dived by a fifth. Online sales rose by 48.5% and sales in convenience stores jumped 10%.
Retail profits for the year are expected to be in line with last year as the chief executive Dave Lewis said the cost of adapting to the pandemic had been “very significant”, including new safety measures in stores, covering sick pay for vulnerable staff who have had to isolate at home and bringing in 47,000 new workers to help with increased demand.
AJ Bell said: “There will be a time when we look back at the pandemic and realise that Tesco went above and beyond to keep the nation’s fridges and pantries stocked.
“In the past few months it has managed to greatly increase the number of homes to whom it can deliver online orders, keep its shelves stocked with the items everyone has needed, and provide jobs to many people who suddenly found themselves out of work.
“The rewards of these efforts are laid out in its latest trading update which shows big growth in food sales and a surge in online business which is likely to have resulted in more households switching their loyalty to Tesco as the supermarket where it is generally easier to get delivery slots than its rivals.
“While these growth achievements have incurred extra costs, from a strategic perspective Tesco will have gained a lot of credibility among the public which will certainly help in its fight against the discounters Aldi and Lidl.
“It shouldn’t really matter that profits have been held back by higher costs as this issue is likely to be outweighed by the longer-term benefits Tesco can enjoy if has managed to attract customers from rivals and secured their future loyalty.”