Tesco H1 profits boosted by doubled online orders during COVID-19

07 Oct 2020 --- UK supermarket chain Tesco saw a surge in its first-half year profits as a result of doubled online orders during the COVID-19 pandemic.

In spite of the government’s push to encourage out-of-home dining through its Eat Out to Help Out scheme, British consumption patterns leaned toward ordering in. As lockdown and quarantine measures rippled through the UK earlier this year, at-home eating was the order of the day.

Tesco more than doubled delivery capacity to 1.5 million slots a week during the first half of the year, including serving 674,000 customers.

Meanwhile, pre-tax profit for the 26 weeks leading up to August 29 was £551 million (US$712 million), up by 28.7 percent in 2019.

“The first half of this year has tested our business in ways we had never imagined, and our colleagues have risen brilliantly to every challenge, acting in the best interests of our customers and local communities throughout,” says Ken Murphy, chief executive of Tesco.

This is Tesco’s first financial overview under Murphy, who began working at the company last week.

In recent developments, Tesco announced its new chief financial officer, Imran Nawaz, who previously worked at Tate & Lyle.

Online boost
Tesco’s operating profit figures fell by 15.6 percent to £1,037 million (US$1.3 billion). Tesco Bank, in particular, made a dent of £155 million (US$200 million).

The company’s sales in the UK and Ireland rose 8.6 percent to £24.3 billion (US$31.4 billion), with overall revenue of £28.7 billion (US$37 billion). Meanwhile, group sales in Central Europe rose by 4.3 percent to £1.9 billion (US$2.5 billion).

The retailer flags that coronavirus-related costs reached £533 million (US$688 million).

Food sales in the UK went up 9.2 percent during the period, the supermarket chain notes.

Industry branches out into alternative channels
As industry braces for the second wave of the pandemic, food businesses have been looking to branch out of the supermarket and into alternative delivery channels to sustain customer engagement.

Kerry’s latest analysis underscored the influence of shifting meal ordering occasions over the F&B landscape, while the rise of “dark kitchens” and new smart delivery technologies are helping pandemic-impacted brands adapt and power through.

In light of the at-home delivery trend, industry players have been actively scaling up their in-house channels. Impossible Foods, for instance, recently launched a new e-commerce site for its US consumers to purchase family-size quantities of the plant-based Impossible Burger.

In March, a new virtual “in store” concept by LifeStyles in 360 debuted, allowing consumers to shop from their homes thanks to virtual reality technology, paired with a white-glove delivery service.

By Benjamin Ferrer