Tesco presents ovation worthy financial results but online challenges remain
Tesco has issued its 2020/21 preliminary results, with the grocery giant notching up £825 million in pre-tax profits, down from £1,028 million in the previous year.
“Tesco has shown incredible strength and agility throughout the pandemic. By putting our customers and colleagues first we have built a stronger business,” says Ken Murphy, Chief Executive.
He adds: “While the pandemic is not yet over, we're well placed to build on the momentum in our business.”
“We have strengthened our brand, increased customer satisfaction and improved value perception.”
“We have doubled the size of our online business and through Clubcard, we’re building a digital customer platform.”
Take a bow
Tesco has had an ovation worthy performance over the past 12 months, with its rapid transition to online grocery shopping, according to Vijayanta Gupta, Senior Vice President at Salsify.
“The cost of Covid-19 on the business has been immense: more staff have been hired while lower margin, online operations were ramped up,” he says.
“Tesco’s balance sheet also took a hit when the company chose to repay £585 million of business rates relief.”
“Its resilience during the pandemic was facilitated, in part, by ramping up its online grocery services, with capacity increasing to 1.5 million deliveries a week.”
He adds: “Recent history shows us that demand for its delivery services will continue beyond the pandemic.”
“Even as lockdown eased last summer, research by Kantar found that one in five UK households were still shopping for food online.”
“This means that Tesco must figure out how to remain successful and profitable despite its low margin online model. This begins with improving the customer experience to unlock more profitable online sales.”
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