- Lockdowns continue to fuel growth for retailers like Tesco and Dunelm.
- The retailers recorded huge sales in the run-up to Christmas season, banking upon their online presence.
The retail sector always looks forward to the festive season, especially Christmas, as people usually tend to spend more during this time. UK’s leading supermarket chain Tesco Plc (LON: TSCO) recorded bumper sales during the Christmas period. The FTSE 100-listed retailer received unprecedented demand for online groceries and serviced nearly 7 million orders during the festive season. Similarly, Dunelm Group (LON: DNLM) witnessed a sales growth of 11.8 per cent in its run-up to Christmas.
(Image source: ©Kalkine Group 2020)
2020 has been the year for retailers dealing in essentials and home-related products. The pandemic-induced lockdowns have forced the Britons to stay indoors, and the only shopping they did was for groceries and home-related products. The retailers dealing in these two categories did quite well in comparison to the overall sector.
UK’s leading supermarket giant Tesco recorded a sales growth of over 7 per cent during its third quarter. Most of the Christmas sales consisted of food-related products as consumers decided to treat themselves and celebrate. Even after repayment of £585 million in business rates relief, the General retailing company expects the operating profit of 2021 to be in line with the previous year.
The company had bolstered its delivery network by hiring several people on both permanent and temporary positions as it anticipated an unprecedented rise in demand for online orders throughout the calendar year 2020.
In 2020, the company witnessed strong momentum in sales due to an unprecedented rise in online orders, driven by lockdowns. Mostly, the customers were buying things online to avoid the risk of catching the virus while stepping out of their homes. On the retail front, Tesco has got most of its grounds covered, however, due to absence of staff, the company expects to incur extra costs which would push the Covid-19 costs to £810 million.
On the flip side, retailers dealing in home-related products are doing fairly well. The pandemic has deeply influenced our lifestyle, and remote working culture has changed the way we consume things today. This has also triggered the boom in the real estate sector to some extent. People are constantly looking for home improvement products and services.
FTSE 250-listed Homewares retailer Dunelm Group recorded strong sales during its second quarter. Although the physical stores were closed as it is a non-essential retail company, it still managed to record a double-digit sales growth during the festive season. The online presence of the homeware retailer has turned the fortunes for it.
The UK-based company expects profit before tax (PBT) to be approximately £112 million for the first half of the financial year 2021 (H1 FY20: £83.6 million). The company was not able to provide guidance for the second half of 2021 due to prevalent uncertainties with reference to lockdowns. However, the company will continue to service home delivery and click and collect orders.