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14 Jan 2021 | 07:02

Tesco sticks to guidance after strong Christmas

(Sharecast News) - Tesco stuck to its guidance for annual results after strong Christmas sales helped offset rising Covid-19 related costs.

Retail operating profit for the current year is likely to be at least the same as in 2019-20 excluding the cost of repaying business rates relief, Britain's biggest food retailer said.

Total sales in the six weeks to 9 January rose 6.8% driven by an 8.4% increase in the UK and Ireland. Like-for-like sales rose 5.4% as equivalent UK and Ireland sales rose 6.3%. Group retail sales rose 7.3% but Tesco Bank income dropped 25.7%.

Tesco said UK sales rose across all formats, channels and categories and that it led the market for every week of the Christmas period. Sales in the UK were driven by food including a 14% increase for Tesco's "finest" range of premium own-brand products.

Online sales rose by more than 80%, generating almost £1bn of extra sales in the third quarter. Sales at the Booker wholesale business rose 6.7% over the Christmas period.

In the 19 weeks comprising the third quarter and the Christmas period group sales rose 7% and like-for-like sales rose 5.6%. UK and Ireland total sales increased 8.5% and like-for-like sales were up 6.1% in those countries.

The FTSE 100 company predicted annual costs for staff absence and other Covid-19 disruption would be £810m, up from an earlier estimate of £725m.

"The strong momentum in the business and the benefits of sustained elevated sales are enabling us to offset the additional Covid-19 costs we are now expecting to incur as a result of the increasing severity of the pandemic," Tesco said. "As a result, our guidance for the 2020/21 financial year is unchanged."

Tesco said it would return £5bn to shareholders in a special dividend after selling its businesses in Malaysia and Thailand in December.
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