Tesco PLC - 1Q Trading Statement 20/21
1Q Trading Statement 20/21
DELIVERING FOR CUSTOMERS
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Total sales change
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At actual rates, the Group sales change is 7.9%,
These results have been reported on a continuing operations basis and exclude the results from our businesses in
"Through a very challenging period for everyone,
In just five weeks, we doubled our online capacity to help support our most vulnerable customers and transformed our stores with extensive social distancing measures so that everyone who was able to shop in store could do so safely.
The costs of doing this have been significant and only partly offset by business rates relief and increased volume. We see the balance as an investment in supporting our customers at a time when they need it most."
Headlines (13 weeks ended
The strategic growth opportunities identified at the Capital Markets Day delivered:
- capacity increased from 600k to 1.3m slots per week; capex
- sales run rate indicates c.
- 590k vulnerable customers added to customer base
- Booker retail partners growth 23.5% (Premier, Londis,
- 54 One Stop conversions to
- Jack's; all stores running at more than
o Pre COVID-19 impact of Clubcard Plus on buying behaviour c.3x the level anticipated pre-launch
o Change in buying behaviour with lower transactions, bigger baskets enhances value of Clubcard Plus offer
o Strong retail sales (+23.5%) offset by declines in catering (down (32.1)%)
o Best Food Logistics sales down (70)%; improving recently to c.(50)% as customers reopen for business
o In severely challenged food service sector, Booker well-placed to emerge in a stronger relative position
• Shopping frequency down (32)%, basket size +64%
• Significant investment in Aldi Price Match (now extending to c.500 lines)
- ROI +19.7% driven by higher conversion of 'out of home' consumption
- Booker +6.1%; includes c.5% contribution from Best Food Logistics
- Sale of Polish business to
o Sale of
o Provision for potential bad debts increased to reflect updated macro-economic assumptions
o Now expect an operating loss of
To help investors and other stakeholders understand a little better what is happening we are sharing a one-off deeper insight into our 1Q 20/21 trading performance; the focus of which is our
Total sales in our
Throughout this period, we continued to invest in our everyday value proposition including the launch of 'Aldi Price Match' in March. As a result of this, in combination with the strength and relevance of our overall proposition, we saw net switching gains2 to
As we refocused our offer on availability and everyday low prices, promotional participation reduced from 28% to 14%. We also saw major shifts in product and category mix as customers focused more of their purchases on essential items. In the
As a result of improvements in customer perceptions of
Responding to the significantly increased demand for our online offer, we have grown that part of our business as quickly as possible. In just five weeks we doubled our online capacity and are now fulfilling over 1.3 million orders per week. Across the quarter as a whole, we delivered 12.6 million orders, including to a priority list of 590,000 vulnerable customers. In addition to providing more delivery slots for customers, we have also increased the availability of our click and collect service, which now represents around a quarter of online orders. As a result of the changes we have made, our online grocery business has grown from c.9% to over 16% of our total
We originally set out a plan to double the capacity of our online business in the medium term, including the development of at least 25 urban fulfilment centres (UFCs). Whilst the construction of our first UFC in West Bromwich Extra was paused in March due to government restrictions, we were able to complete the work in June and our first customer order will be delivered next month. We are well positioned to capture market growth beyond our original ambition and will continue with the roll out of the UFC programme as we respond to the accelerated shift in customer demand.
Our response to COVID-19 has required significant changes to our operations which have led to a substantial increase in costs, with the main impact in the
Overall Booker's sales grew by 6.1% including a c.5% contribution from Best Food Logistics, which was acquired in early March. Booker saw a significant uplift in its retail business with sales growing by 24% partially offset by a significant reduction in customer footfall for our catering business with sales falling by (32)%. In catering, we are already starting to see our competitive position strengthen and expect to exit the crisis with market share well beyond original levels. Booker has provided invaluable support to our grocery online business including by providing more than 100k additional click and collect slots and directly supplying nearly 18,000 deliveries to over 1,000 care homes.
Our priority remains ensuring the safety of our customers and colleagues, and the consistent availability of food.
Whilst any forecast is inherently uncertain, based on an assumption of a continued easing of lockdown restrictions in the
Following revised macro-economic assumptions regarding GDP and unemployment levels, we have increased our provision for potential bad debts at
More detail about our actions to provide food for all, safety for everyone, and support for our colleagues and communities is shared at www.tescoplc.com/covid-19.
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01707 940 900
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01707 940 693
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0330 678 0639
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0207 420 3143
A call for investors and analysts will be held today at
Dial in number: 0800 279 6619 (toll free) / +44 (0) 844 481 9752
Access code: 6329694#
All materials, including a transcript and playback facility, will be made available on our website.
We will report our Interim results on Wednesday
1. Subject to antitrust approval.
2. Kantar Worldpanel 12 w/e value switching data to
3. Survey by
5. Internal customer viewpoint survey.
This information is provided by RNS, the news service of the
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