Tesco doubled profits in the first half of the year as it reduced costs related to the coronavirus pandemic and said its strong supply chain had kept shelves stocked despite widespread delivery problems across the industry.
Sales rose 3% to £27.3bn in the six months to 28 August and profits soared by 107% to £1.1bn.
It said its shoppers had sought out clothing and other household goods while it got a boost from the Euro 2020 football tournament, which was postponed to the summer of 2021, and more families holidaying in the UK because of travel restrictions.
“As industry supply chains came under increasing pressure, we were able to leverage our strong supplier relationships and distribution capability to maintain good levels of availability for customers, contributing to our market outperformance,” the UK’s biggest supermarket said in a statement.
Its online business continued to grow – by 2.3% – and shoppers continued to prefer big shops and large supermarkets as Covid concerns continued. Sales in its convenience stores fell as those in commuter areas lost out from the switch to working from home. The company is testing out a fast-track grocery service – Whoosh – from its convenience stores and this is now in 60 shops.
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Ken Murphy, the chief executive, said Tesco expected to make up to £2.6bn of profits for the full year, about £700m more than previously anticipated.
The profits upgrade came despite a £193m payout to shareholders related to a legal case linked to an accounting scandal at Tesco from 2014.
“We’ve had a strong six months; sales and profit have grown ahead of expectations, and we’ve outperformed the market against a backdrop of profound change. Tesco has many unique advantages. The scale and reach of our store estate and online operations are unmatched in the UK,” Murphy said.