Tesco share price is still well below the pre-pandemic levels that we saw in February 2020 despite performing very well in the face of some very difficult circumstances.
After an initially shaky start as supply chains creaked and groaned under the strain of the initial lockdown the entire supermarket sector has been one of the unsung heroes of the pandemic, with management and staff straining every sinew to keep the country fed.
To recognise this Tesco paid all front-line staff a 10% Christmas bonus, which on the face of it was the least they could do given the payment of a special dividend to its shareholders from the proceeds of the sale of their businesses in Thailand and Malaysia for £8.2bn…
Today’s full year numbers showed that these higher costs, as well as investment in extra capacity, have not only impacted profits, but in facing up to the challenges presented by the likes of Aldi and Lidl revenues, and its “Aldi Price Match” campaign, have also impacted revenues which have come in lower, despite the higher demand due to the pandemic.
While group like for like sales rose by 6.3%, with the UK and Ireland accounting for 6.8%, revenues including fuel were 0.4% lower from a year ago at £57.9bn.
In terms of the outlook Tesco said it expects sales volumes to decline as lockdown restrictions ease, however costs are also expected to decline as well. This should translate into better margins, and an increase in profits, which should head back to the levels seen last year.