Panic-buying customers boosted sales at the UK's biggest grocery chain by 30%

Reuters

FILE PHOTO: A woman walks past a Tesco extra superstore near Manchester

• Tesco, the UK's largest grocery store chain, saw a 30% rise in sales as shoppers stockpiled before the national lockdown.
• The retailer expanded its home delivery capacity from 660,000 slots to around 780,000 slots.
• More than 45,000 "temporary colleagues" have been hired in the last two weeks to keep up with customer demand.
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UK's supermarket Tesco raked in a 30% sales increase in the first few weeks of the novel coronavirus outbreak as customers stockpiled items.

Tesco said initial panic buying cleared the supply chain of certain items.

Service levels have now returned to normal as panic buying has subsided, Tesco's outgoing chief executive Dave Lewis said in a statement.

The supermarket chain is bearing significant costs, particularly in paying staff, while it keeps the nation fed but these have been partially offset by government relief for business rates. Lewis said a significant number of employees were absent in the face of the pandemic, due to the nature of their work.

Tesco has recruited more than 45,000 "temporary colleagues" in the UK in the last two weeks.

Increased sales may not bring a boost to the bottom line, however, since it heralds a disruption to operations.

"Growth is only really relevant if it is profitable," said AJ Bell investment director Russ Mould in a note. "The 30% surge in sales in recent weeks may have been more of a headache than the boost it might superficially have appeared to be."

Photo by Robin Pope/NurPhoto via Getty Images

Empty shelves in a Tesco store in Kent as shoppers stockpile basic consumer goods for fears of a potential quarantine due to an outbreak of Coronavirus (COVID-19) on March 29, 2020 in London, UK

Despite the economic downturn caused by COVID-19, Tesco still aims to go ahead with its final dividend payment of £635 million ($785 million).

The retailer notified its investors that it would not provide a financial outlook for the following year. But, Tesco said, if customer behavior returns to normal by August, any unusual costs would be offset by "food volume increases, twelve months' business rates relief in the UK and prudent operations management."

As part of its latest drive to support customers, CEO Lewis also said the retailer has expanded home delivery capacity from 660,000 slots to around 780,000 slots and plans to increase this by another 100,000 in the coming weeks.

The pandemic has meant all ten of the largest UK retailers experienced simultaneous growth as a consequence of stockpiling. Combined, the supermarkets raked in a record £10.8 billion ($13.25 billion) in March 2020.

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