With empty supermarket shelves and social media feeds filled with HGV driver shortages, you might have expected Tesco’s half-year figures to be a tale of mourning.
Yet the retailer is upbeat and continues to take advantage of the lifestyle changes we all made during the early stages of the pandemic.
Queuing outside shops two meters away in the rain may sound like a nightmare, but the change in online shopping due to pandemic restrictions is very real.
Tesco’s Whosh online platform delivers groceries from its Express stores in less than an hour
Online sales are up 74 percent compared to two years ago, a trend that shows no sign of going away.
But while online sales are growing, Tesco is doing well elsewhere as well. Overall revenue is up more than eight per cent as compared to pre-Covid times, while the company also managed to beat last year’s sales figures slightly.
This is when supermarkets enjoyed bountiful sales when we were unable to go to restaurants or buy lunches at sandwich shops. Profit more than doubled to more than £1.1 billion.
So how has Tesco outperformed the market? Chief Executive Ken Murphy puts it down to a flexible supply chain and the depth of relationships with suppliers that have evolved over time.
Initiatives such as its Aldi price matching scheme have ensured that it holds its own against popular German discount chains, while its Clubcard scheme means it knows its customers better than most rivals and can reach them accordingly. .
Tesco never sits on its pride. The company is always testing new initiatives, most recently dipping its toe in on-demand groceries with its Hush platform, offering groceries in less than an hour from its Express stores.
Latest figures show that Express stores are faltering in terms of sales, indicating that on-demand delivery facility may enter the market. So Whosh could help Tesco maintain market share.
The supermarket has also identified £1 billion in cost savings it can make through streamlined operations. With all this good news, Murphy raised hopes for full year profits to be on the order of £2.6 billion.
He also announced a share buyback plan that should put upward pressure on the share price.
Despite all this good news in the trolley, there is still room for concern. The disposable income available to most households is going to decrease rapidly as higher energy prices continue to drive down and inflation continues to rise.
Whether Tesco will be able to maintain its reputation as a good value retailer will be the key to its success in retaining customers who might otherwise blame Aldi or Lidl.
Brokers reacted positively to Tesco’s data, some of whom, including Barclays, upgraded their share price expectations.
Midas Verdict: Tesco has had a good pandemic. The question is whether it can tackle the supply chain issues and falling consumer firepower that is on its way this winter.
The odds are in Tesco’s favor, as it could have lower costs, a supply chain that’s the envy of its competitors, and even a bank that’s doing well despite closing its current account operations. Is.
Following Morrison’s private equity auction, some even speculate that the company may be on someone else’s shopping list. This can provide relief to the shareholders. Purchase.
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