Before sharing our results for the financial year ending 29 February 2020, we would like to update you on the impact of COVID-19.

COVID-19 Update

Our priority in dealing with the exceptional challenges posed by COVID-19 is to ensure the safety of our customers and colleagues, support our suppliers and maintain the availability of food.  In every region we are working closely with the government and public health authorities to ensure we are supporting wherever we can and following all the relevant guidelines.

The specific challenges across the Group are three-fold, and most keenly felt in the UK.  First, the significant change in buying behaviour of our customers.  Second, the impact of the virus on our colleagues and thirdly, helping the more vulnerable in society, as defined by the UK Government.

In the first few weeks of the crisis, significant panic buying (c.30% uplift in the UK) cleared the supply chain of certain items.  This has now stabilised across the Group and more normal sales volumes are being experienced.  The size and nature of our workforce means we have experienced a significant absence of colleagues.  Full colleague sickness support is in place and in the last two weeks alone, we recruited more than 45,000 colleagues in the UK.

Whilst we have already stepped up our capacity on Grocery Home Shopping by more than 20%, and will continue to increase this, there is simply not enough capacity to supply the whole market.  Between 85% and 90% of all food bought will require a visit to a store and here significant changes to the store environment have been implemented to maximise safety for colleagues and customers.  We will continue to try and prioritise home delivery for the most vulnerable in society as defined by the UK Government. 

Dave Lewis, Chief Executive:

“COVID-19 has shown how critical the food supply chain is to the UK and I’m very proud of the way Tesco, as indeed the whole UK food industry, has stepped forward.

In this time of crisis we have focused on four things; food for all, safety for everyone, supporting our colleagues and supporting our communities.

Initial panic buying has subsided and service levels are returning to normal.  There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK Business rates relief.

Tesco is a business that rises to a challenge and this will be no different.  I would like to thank colleagues for their unbelievable commitment and customers for their help and understanding.  Together, we can do this.”


Our response to date   

Food for all
  • introduced a restriction of three items per customer on every product line; now removed on majority of products as stock levels stabilise
  • introduced special hours in stores for NHS workers, and more vulnerable and elderly customers
  • expanded Grocery Home Shopping capacity by +20% in the last two weeks, adding 145,000 slots
  • working with Government to prioritise delivery slots for vulnerable people without a support network
  • temporarily closed all cafes, phone shops, meat, fish, deli counters and salad bars
  • asked our office colleagues to volunteer for shifts in stores where they can
  • working closely with supplier partners to simplify our range to get more of the most popular products on shelves
  • focusing on simple pricing for single products, removing many multi-buy promotions
Safety for everyone
  • introduced social distancing measures in stores; filmed a new advertisement with colleagues summarising them
  • created one-way aisles and ‘one-in, one-out’ system to help limit flow
  • using directional floor markings to help everyone keep a safe distance
  • installing protective screens at the front and back of our checkouts
  • enhanced cleaning routines and new cleaning stations in stores
  • inviting customers that can, to pay at the checkout by card
Supporting our colleagues
  • colleagues ill with COVID-19 or in isolation receiving full pay from their first day of absence
  • fully paid absence for 12 weeks for colleagues who are over 70, vulnerable or pregnant
  • paying a 10% bonus on the hourly rate for hours worked to colleagues across stores, distribution centres and customer engagement centres
  • range of policies to support parents during school closures, including new school closure leave policy
  • more than 45,000 new colleagues have joined Tesco since 20 March, including pickers and drivers
  • colleague discount increased to 15% from 6 April to 7 May
Supporting our communities
  • we will continue our ongoing donations of £3m of food every month through our Community Food Connection scheme and distribution centres
  • a further £15m of food to be donated to FareShare and the Trussell Trust over the next 12 weeks and a further £1m donation between the two organisations
  • focusing £2m funding from Bags of Help community donation scheme to charities helping the most vulnerable
  • building on our partnership with the British Red Cross, donating £2m to help with extra costs in supporting people in need
  • over £1m of funding in stores so they can support causes in their local neighbourhood
  • donating food for 1m free meal parcels for front-line NHS workers, supporting ‘’ initiative
  • constructing our first dedicated NHS Nightingale Hospital pop-up store, at the NEC in Birmingham
Looking ahead

COVID-19 is having a material impact on the operations of our business and we are incurring significant additional costs, particularly in payroll as we recruit additional colleagues to meet demand and cover the work of those colleagues who are absent and being paid.

Whilst the full financial impact of the crisis for 2020/21 is impossible to predict with a high degree of certainty, we have considered a range of scenarios to understand potential outcomes on our business and plan appropriately.  Dependent on the scenario, the estimated impact on our retail cost lines is between c.£(650)m and c.£(925)m including significant cost increases in payroll, distribution and store expenses.

At this stage it would not be prudent to provide financial guidance for 2020/21, however if customer behaviour were to return to normal by August it is likely that the additional cost headwinds incurred in our retail operations would be largely offset by the benefits of food volume increases, twelve months’ business rates relief in the UK and prudent operations management. 

Tesco Bank, which operates as a stand-alone regulated entity, is expected to be impacted by a reduction in income from all its activities, including credit cards, loans and travel money.  This expected decrease in income, in addition to provisions for potential bad debts, is likely to result in a loss for the Bank in the year ending February 2021.  Notwithstanding this, the Bank’s capital ratios (Tier 1 ratio: 20.6% and Total ratio: 23.1% as at 29 February 2020) and liquidity are expected to remain strong.

Up to date information on our response to COVID-19 can be found on our website at



On a continuing operations basis 2019/20 2018/191   Change at actual rates Change at constant rates
Headline measures2 (on a 52 week comparable basis):          
Group sales3 £56.5bn £56.9bn   (0.7)% (1.0)%
- UK & ROI £44.9bn £44.9bn   0.1% 0.2%
- Central Europe £5.3bn £6.0bn   (12.1)% (10.1)%
- Asia £5.2bn £4.9bn   6.7% 0.1%
- Tesco Bank £1.1bn £1.1bn   (2.6)% (2.6)%
Group operating profit before exceptional items and amortisation of acquired intangibles4 £2,959m £2,607m   13.5% 12.6%
Retail free cash flow5 £2,063m £889m   132.1%  
Net debt5 £(12.1)bn £(13.2)bn   down 8.4%  
Diluted EPS before exceptional and other items6 17.92p 14.01p   27.9%  
Dividend per share 9.15p 5.77p   58.6%  
Statutory measures (on a 53 week basis):
Revenue £64.8bn £63.9bn   1.3%  
Operating profit £2,518m £2,649m   (4.9)%  
Profit before tax £1,315m £1,617m   (18.7)%  
Diluted EPS7 9.54p 13.04p   (26.8)%  


For UK & ROI our reported statutory performance is for the 53 weeks ended 29 February 2020.  For all other operations, these results are for the calendar year ended 29 February 2020.  To aid comparability, headline results are shown on a 52 week basis.  A reconciliation between statutory results and headline alternative performance measures is shown on page 4.


Headlines (52 week comparable basis)

Customer satisfaction
  • Shopping trip satisfaction improved across all formats; brand net promoter score +7 points year-on-year8
  • Brand perception further improved across range, quality and value9
  • ‘Aldi Price Match’ launched in March across hundreds of Tesco and branded products
Cash profitability
  • Retail operating profit before exceptional items and amortisation of acquired intangibles10 of £2,766m, +14.9%, margin 4.4%;
  • Strong performance in UK & ROI and Asia, partly offset by disruption impact of transformation in Central Europe
    • UK & ROI.                 £2,184m,  +16.9%,  margin 4.2%
    • Central Europe      £156m,    (29.4)%,  margin 2.8%   
    • Asia                          £426m,    +33.5%,   margin 8.2%
  • Bank operating profit before exceptional items £193m, (3.0)%
  • Cumulative Booker synergies £207m, delivered a year ahead of target; acquisition of Best Food Logistics in early March
  • Group operating margin4 of 4.64% (+56bps); Retail EBITDA10 up 8.8% to £4.7bn
Cash flow
  • Retail free cash flow5 of £2,063m, including CE property disposals of £167m and £277m from sale of China joint venture11
  • Final dividend 6.50p, reflecting strength of last year’s performance and our robust liquidity and balance sheet; full-year dividend of 9.15p representing a pay-out ratio of 50%
  • Net debt5 of £(12.1)bn, down £1.1bn year-on-year
Proposed sale of businesses in Thailand and Malaysia12
  • Consideration of $10.6bn (c.£8.2bn) on a cash and debt free basis, conditional on shareholder and regulatory approval
  • Plan to return c.£5bn to shareholders via a special dividend; £2.5bn one-off pension contribution to eliminate funding deficit
  • Completion of sale expected 2H 2020; Thailand and Malaysia to be treated as discontinued for 2020/21 financial year
Dave Lewis, Chief Executive:

“Over the last five years we have focused on serving customers better, re-engaging our colleagues, completely resetting our relationships with our suppliers and as a result we have been able to add value for our shareholders.

These endeavours put us in a strong operational and financial position to deal with the challenges of COVID-19. 

I would like to thank Tesco colleagues for their contribution to this turnaround journey and for their unbelievable commitment as we face into the COVID-19 crisis.  Their contribution continues to be immense.”

To read more, download the full Preliminary Results 2019/20 press release as a PDF below.

Preliminary Results 2019/20 press release

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