Tesco underlines supplier support in full-year results

By Gwen Ridler

- Last updated on GMT

Tesco worked on improving supplier relationships during 2020/21
Tesco worked on improving supplier relationships during 2020/21

Related tags Finance Tesco

Tesco boosted support for its suppliers during the COVID-19 pandemic, outlining a string of measures across a year as it reported an increase in sales in its full-year 2020/21 financial results.

Greater collaboration with suppliers had allowed the retailer to maintain availability and adapt to exceptional shift in demand due to COVID-19, it stated.

In the report, Tesco said: “In response to the significant demand peak early in the year, we worked with our supplier partners to simplify our offer, prioritising availability in essential products and categories. 

“We reduced promotional participation from 36% to 21% through the year as we focused on every day great value for customers.”

Immediate payments for small suppliers

To support its suppliers, Tesco moved to immediate payment of invoices for all small suppliers during the pandemic – a move that was extended until the end February 2022 at the start of this year.

The retailer also worked with its partners throughout the supply chain to remove 200,000 tonnes of cumulative food waste from combined operations across and remove 1bn pieces of plastic from its UK business.

Tesco also supported catering customers’ move to a delivery model through its wholesale arm, Booker in order to meet changing demand.

Tesco posted sales growth of 7.1% to £53.4bn compared to the previous year, with sales in the UK and the Republic of Ireland accounting for £48.bn of those sales (up 8.8%).

However, operating profit before exceptional items and amortisation was down 29.1% to £1.8bn. The company attributed this mainly due to the disruption caused by the ongoing pandemic, with significant costs in safeguarding employees and the procurement of safety equipment – slightly offset by higher sales.

Capital expenditure

Tesco reported a higher capital expenditure – £88m higher year-on-year – due to higher maintenance spend on UK stores and technology and investment in online capacity.

“In response to the unprecedented increase in customer demand for online groceries, we rapidly expanded our online business, more than doubling capacity to 1.5m slots per week over a five-week period,” ​read the report. “Online sales participation doubled to 15% for the full year, reaching a peak of 18% during the fourth quarter.”

The UK’s largest supermarket operator announced that Imran Nawaz is to take over as chief financial officer on 1 May 2021, following Alan Stewart's retirement on 30 April 2021.

Commenting on the results, chief executive Ken Murphy added: “While the pandemic is not yet over, we're well-placed to build on the momentum in our business.  We have strengthened our brand, increased customer satisfaction and improved value perception.  

“We have doubled the size of our online business and through Clubcard, we're building a digital customer platform.  Sustainability is now an integral part of our business strategy and we're doubling down on our efforts to reach net zero.”

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