11 December 2020

Tesco

Tesco needs little introduction - it’s one of the UK’s top retailers in groceries and merchandise and has a market capitalisation of £20bn.

by Rheanna Filmer

Research Assistant

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Price
£2.28
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52 Week High-Low
£2.60—£2.02
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Net Yield
4.28%
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Hist / Pros Per
22—16
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Equity Market Cap
£22,221

The COVID-19 pandemic accelerated the trend towards e-commerce that Tesco had to work hard to capture. The proportion of online sales grew from 9% to 16% of total UK sales by the end of the half year. 

The major shift to e-commerce came with c.£533m of extra costs, which includes for more staff in stores and facilitating online orders. The supermarket business is labour heavy, and Tesco warned that the additional costs would be high. Fortunately, further restrictions on pub and restaurant attendance boosted food sales and Tesco benefited from the business rates holiday introduced by the government. Retail operating profit margin therefore held up, increasing by 0.19% year-on-year. 

Three quarters of the group’s operating profit are from the UK and Republic of Ireland. Tesco have benefited from the expected spike in food sales brought on by the second lockdown without quite as much of a shock to their cost base.

Managing your wealth

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Understanding Finance

Helping clients understand what we do is key to building relationships. To explain some of the industry jargon that creeps into our world, we’ve pulled together a section of our site to help.


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