Tesco reported record Christmas sales as consumers piled up on groceries and festive treats as pandemic-led restrictions prevailed.
Tesco (TSCO) said UK like-for-like sales increased 8.1% over the six-week Christmas trading period to Jan. 9, after growing 6.7% in the three months to Nov. 28. Online sales jumped 80%, which translates to almost £1 billion in extra sales over the 19-week period. The UK retailer addet that order numbers have continued to grow since Christmas and exceeded all-time records for both home deliveries and click & collect services last week.
“We delivered a record Christmas across all of our formats and channels. In response to unprecedented demand for online groceries, colleagues delivered over seven million orders containing more than 400 million individual items over the Christmas period,” Tesco CEO Ken Murphy commented. “We’re now supporting 786,000 vulnerable customers with priority access to online slots and, as lockdown measures continue, we’ll keep doing everything we can to ensure everyone can safely get the food and essentials they need.”
“We’re in great shape to keep delivering in 2021 and beyond,” Murphy added.
UK sales performance over the Christmas period was driven by food orders including a 14% increase in sales of finest products as customers looked for more opportunities to treat themselves during the festive season.
Furthermore, Tesco estimated that the strong sales momentum has helped the retailer to offset an increase in additional COVID-19 costs. The UK retailer now expects incremental costs for the full-year to amount to £810 million, up from the previous forecast of £725 million. As a result, Tesco reaffirmed its 2020/21 guidance and forecasted that its retail operating profit is likely to be at least at the same level as in 2019/20. (See TSCO stock analysis on TipRanks)
Earlier this month, Barclays analyst James Anstead reinitiated coverage on the stock with a Buy rating and a 290p price target, citing potential for ongoing cash returns and improved relative sales trends.
The rest of the Street is cautiously optimistic on the stock with a Moderate Buy analyst consensus based on 5 Buys and 2 Holds. That’s with an average price target of 276.67p, which implies 15% upside potential over the coming 12 months.
Meanwhile, TipRanks’ Smart Score on Tesco is a perfect 10, which indicates a strong chance of market outperformance.