Tesco shares slipped on the open despite surging sales online and in-store. Due to the economic situation and expected rise in unemployment, the company has increased provisions for bad debts at Tesco Bank, which will result in a loss of £175m-£200m for the 2020/21 financial year. In April management had flagged a likely loss at the bank this year versus £193m in operating profit last year. This will weigh on group profits for the year and while grocery sales are much better, profits may struggle to follow the kind of yoy progress.. At the core business, sales are of course exceptionally strong online (+48%) and roaring ahead in-store too. Total sales in the core UK & ROI business increased by 9.2 per cent. Booker was up 6 per cent, with the –32 per cent decline in catering offset by a +24 per cent increase in retail. The decision to match Aldi on prices means lower margins for core consumer division, whilst online operations are costly to maintain, particularly as the business has responded to such a surge in demand. But in big retail you have to keep running. Shares are down 11 per cent YTD.
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