Tesco said it is “incurring significant additional costs” as the company tries to deal with the impact of the ongoing Covid-19 pandemic.
In a statement released alongside its preliminary results for the financial year ending 29th February 2020, the supermarket said the pandemic is having a material impact on the operations of its business, particularly in regards to payroll as it recruits additional colleagues to meet demand.
The retailer said the effect of the virus had caused an estimated impact on its retail cost lines between c.£(650)m and c.£(925)m, including significant cost increases in payroll, distribution and store expenses.
Tesco said In the first few weeks of the crisis, significant panic buying (c.30% uplift in the UK) cleared the supply chain of certain items, but this has now stabilised across the Group and more normal sales volumes are being experienced.
“Covid-19 has shown how critical the food supply chain is to the UK and I’m very proud of the way Tesco, as indeed the whole UK food industry, has stepped forward.”
Tesco chief executive, Dave Lewis, said: “Covid-19 has shown how critical the food supply chain is to the UK and I’m very proud of the way Tesco, as indeed the whole UK food industry, has stepped forward.
“In this time of crisis we have focused on four things; food for all, safety for everyone, supporting our colleagues and supporting our communities.
“Initial panic buying has subsided and service levels are returning to normal. There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK Business rates relief.
“Tesco is a business that rises to a challenge and this will be no different. I would like to thank colleagues for their unbelievable commitment and customers for their help and understanding. Together, we can do this.
“Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders.
“These endeavours put us in a strong operational and financial position to deal with the challenges of Covid-19.
“I would like to thank Tesco colleagues for their contribution to this turnaround journey and for their unbelievable commitment as we face into the Covid-19 crisis. Their contribution continues to be immense.”