Tesco Sales Rise More Than Expected on Pandemic Shopping

(Bloomberg) -- Tesco Plc said first-quarter sales jumped more than expected, fueled by customers switching from discounters, pandemic-related stockpiling and a surge in online shopping.

Sales in the U.K. and Ireland climbed 8.2% on a like-for-like basis in the 13 weeks ended in May, Britain’s largest grocer said in a statement Friday. They were expected to increase 7.5%, based on the consensus estimate from 10 analysts, according to Tesco.

The grocer said it has been gaining shoppers from one of its chief rivals -- the German discounter Aldi -- for the first time in a decade. In a sign of how the pandemic is changing behavior, customers felt safer in Tesco’s bigger stores where it is easier to socially distance, Chief Executive Officer Dave Lewis said on a call with journalists. They were also drawn by Tesco’s price-matching with Aldi on hundreds of products.

Tesco doubled its capacity for online business as more people ordered groceries on the internet rather than visit stores. Lewis said the company is on track to generate 5.5 billion pounds ($6.8 billion) of sales from its e-commerce arm, up from 3.3 billion pounds last year.

The CEO said he expects some customers will make a permanent move to buying online even after the U.K. lockdown lifts completely, noting that there will be “a shift with how people shop with us in the future.”

Tesco plans to spend an extra 840 million pounds this year to run stores safely during the pandemic. It expects retail operating profit to be in line with last year.

Shares of Tesco rose as much as 1.1%.

©2020 Bloomberg L.P.