Coronavirus has driven sales to record highs at UK supermarkets, although the bulk of personal goods retailers have suffered.
Panic buying in the aisles of Tesco (TSCO) and Wm Morrison (MRW) drove overall sales up by 20.6 per cent in the four weeks to 22 March, according to market data source Kantar, with an extra £1.9bn spent in supermarkets. Rapacious demand for food moved online, too, and in mid-March Ocado (OCDO) temporarily closed its website for maintenance in order to ensure “distribution of products and delivery slots is as fair and accessible as possible”.
The government’s decision to suspend business rates for 12 months in response to the outbreak also boosted the big grocers. The scale of their annual outlay on business rates compared with their profits is revealing. Morrison’s paid £308m in business rates over its 2019/20 financial year, compared with pre-tax profits of £408m. J Sainsbury (SRBY) paid £567m in the year to 9 March 2019, against profits of £239m. Supermarket shares weren’t immune to wider market routs over February and March, but on a percentage basis they remain down on the start of 2020 ‘only’ by a matter of low double-digits.
The picture is altogether more stark in the rest of the personal goods sphere. Greggs (GRG) scrapped its dividend and share buyback programme, saving the sausage roll purveyor around £40m. The luxury sector has been ravaged by a loss of income, with Burberry (BRBY) and Watches of Switzerland (WOSG) issuing warnings in response to Covid-19. But while stores in Europe and the US remain shut, there are signs of recovery in China, a lucrative luxury market, where Burberry has concentrated its efforts in recent months. Most of Burberry’s stores in mainland China have now reopened, although as of 19 March 40 per cent of its outlets around the world were closed.
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