Stockpiling consumers have boosted Tesco‘s turnover by 30 %, but the coronavirus crisis also costs the British supermarket chain nearly a billion euros. The retailer was doing better last year, but now the coronavirus threatens to undo all that good work.
45,000 extra employees
In the first few weeks after the coronavirus outbreak, Tesco’s sales increased by 30 %, as consumers built up large reserves of non-perishable products. The first wave of panic has now passed and the level of service has returned to normal, says CEO Dave Lewis, but “feeding the nation” involves significant additional costs.
Indeed, 50,000 employees of the supermarket chain, the United Kingdom’s largest private employer, are currently absent. In order to fill the shelves, the retailer has had to recruit more than 45,000 new employees in the last two weeks.
Up to one billion in extra costs
The total financial impact is as yet impossible to predict, but Lewis estimates that the additional costs of salaries, distribution and warehousing will amount to between 650 million and 925 million pounds (740 million to 1,05 billion euros). However, supply and sales volumes have more or less stabilised in the meantime.
In its financial year prior to the coronavirus crisis, up to 29 February, Tesco had performed well: while turnover remained almost stable at 56.5 billion pounds (64 billion euros), pre-tax profit amounted to 1.3 billion pounds (1.5 billion euros), an increase of 12.6% compared to the previous year. Last year, investors were seeing the first signs of a positive trend after years of poor performance… until the arrival of Covid-19.
