Tesco sees ‘limited disruption’ to Irish supplies – chief executive

Online sales climb as pandemic fuels demand

Photograph: Will Oliver/EPA

Photograph: Will Oliver/EPA

 

Tesco, Britain’s biggest retailer, has experienced some disruption to supplies, particularly to Ireland, North and South, since a post-Brexit trade deal with the European Union kicked in on January 1st, its boss said on Thursday.

“We have seen some limited disruption into the Republic of Ireland and into the north of Ireland, but we’re working very closely with government on both sides of the Irish Sea to smooth the flow of product,” Ken Murphy told reporters after Tesco updated on Christmas trading.

He said Tesco’s product availability in both markets “remains strong”.

The disruption was limited to certain categories such as short shelf life ready meals, he said. The chief executive said he was confident Tesco would have right measures in place to supply Northern Ireland after end of a three-month grace period on certain rules and regulations with the EU on March 31st.

Mr Murphy also said there had also been “teething problems” with supply flows from continental Europe to the UK.

“Inevitably there are bedding-in issues, teething issues, that you would expect with any new process that’s been set up at relatively short notice,” he said. “We’re working our way through those and we would hope over the coming weeks and months that we will end up with a much smoother flow of product.”

Tesco followed rivals in reporting buoyant Christmas trading, as pandemic restrictions meant people splashed out on celebrations at home.

Irish Christmas sales

Sales in the Republic were 11.7 per cent higher in the third quarter to November 28th, with that figure rising to 12 per cent when the Christmas trading period was included.

The strongest contribution came from the company’s large stores, Tesco said.

Online sales surged 70 per cent as record demand drove Tesco to increase capacity.

The group said UK like-for-like sales growth was 6.7 per cent in the third quarter accelerating to 8.1 per cent in the six weeks to January 9th.

“We delivered a record Christmas across all of our formats and channels,” said Mr Murphy, who succeeded Dave Lewis in October.

Tesco’s update follows strong Christmas trading reports from Sainsbury’s, Morrisons and Lidl.

Tesco estimated additional Covid-19 costs would be £810 million in its 2020-21 year, up from £725 million forecast in October.

But it still maintained its guidance for 2020-21 retail operating profit before exceptional items of “at least” the same level as 2019-20’s, excluding the repayment of £535 million of business rates relief.

Tesco also continues to expect to report a loss for Tesco Bank of between £175 million and £200 million for the year. – Reuters