AUS
NZ
UK
CA
USA
IND
_06_04_2026_00_29_48_108019.jpg)
Summary
- Czech billionaire has reportedly bought a 3.05 per cent stake in Sainsbury’s
- Tesco has joined hands with the food sharing app Olio to serve the local community
- Retail stocks are also known as defensive stocks have delivered positive returns since the lockdown in March
The retail industry seems to be unfazed by the carnage induced by the coronavirus pandemic. General retailers in UK have been operational during the heightened crisis induced by the Covid-19 pandemic. UK retailers have been an important pillar in terms of contribution made to the nation’s economy. They have been working tirelessly to keep their supply chains up and running in order to service the vulnerable sections of society.
The retail stocks are also known as defensive stocks are deemed safe by the market experts amid the turmoil caused by the coronavirus pandemic. Since the lockdown in March, retail stocks have delivered positive returns. This has attracted big institutional investors to invest in these companies.
J Sainsbury Plc and Tesco Plc have been in the limelight
According to some media reports, Daniel Kretinsky has recently become one of the major shareholders in the supermarket chain J Sainsbury Plc (LON:SBRY); the Czech billionaire has bought a 3.05 per cent stake in the UK based retailer. J Sainsbury or Sainsbury’s has a strong brand recognition across the UK, and the company has connected well with the customers through its online food delivery proposition during the unprecedented crisis.
On the same time, UK’s leading supermarket chain Tesco Plc (LON: TSCO) recently made the headlines for its social efforts. The leading supermarket chain has joined hands with the food sharing app Olio, which is a social enterprise aiming to feed the vulnerable sections in the local community. Tesco has rolled out this scheme at most of its stores and has decided to donate edible surplus food due for expiry.
Must read: Tesco’s Experiment with Drone Can Be A Game Changer for Supermarkets
Let us dive deep into the performance of Sainsbury’s and Tesco.
J Sainsbury Plc
J Sainsbury Plc (LON:SBRY) is an FTSE 100 listed Company, which operates and manages a chain of supermarkets in the United Kingdom. The Company witnessed an increase in overall sales in the first quarter of the financial year 2021. Moreover, it is progressively pushing sales through the online marketplace. The Company witnessed a sales growth of single-digit percentage in grocery during the lockdown period, and this growth is likely to sustain through the first half of 2021.
The company’s revenue surged from GBP 23,506 million in FY16 to GBP 28,993 million in FY20. During the course of four years (FY16 – FY20) the company’s revenue grew at a CAGR (Compounded annual growth rate) of 5.38 per cent.
Q1 Business Highlights
- Online sales surged more than double during the period, while clothing sales declined by 26.7 per cent on a year-on-year basis.
- Driven by strong sales performance from grocery and Argos businesses, the sales from grocery business surged by 10.5 per cent, and general merchandise surged by 7.2 per cent on a year-on-year basis.
- The Company witnessed an increase in retail sales by 8.5 per cent and 8.2 per cent on a like-for-like basis.
The shares of Sainsbury’s have performed poorly in comparison to the Footsie index during the course of the last six months. The stock created a new 52 week low of GBX 174.95 during mid of March. Since then, the stock has delivered a share price return of 11.49 per cent.
6-month period Comparative chart: SBRY vs FTSE 100
(Source: EODHD/Others, Thomson Reuters)
Tesco Plc
United Kingdom-based food & drug retailer Company, Tesco Plc (LON:TSCO) has shown a decent increase in online business in the UK, Ireland, and Central Europe. Tesco has doubled its online capacity in recent times. The UK based retailer has transformed the shopping experience by implementing extensive social distancing measures and offering support to the vulnerable sections of society.
Q1 Business Highlights
- With an increase in sales of 8.2 per cent in the UK and Ireland there was a surge in total sales by 8 per cent and 7.9 per cent on an LFL basis.
- The Company managed to increase online capacity significantly to 1.3 million slots per week from 600 thousand slots per week and expects around £2 billion of sales growth in FY2021.
- The sales from the Central European region (except Poland) remained decent with an increase of 3.3 per cent and 3.9 per cent on an LFL basis.
6 month period Comparative chart: TSCO vs FTSE 100
(Source: Thomson Reuters)
The shares of Tesco have performed poorly in comparison to the Footsie index during the course of the last six months. The stock created a new 52 week low of GBX 211.20 during mid of March. Since then, the stock has delivered a share price return of 3.46 per cent.
Tesco to introduce drone delivery
Apart from increasing the number of online delivery slots, Tesco has been investing heavily in innovative technologies that can certainly be the game changer in the coming years.
Drone delivery is in a nascent stage, and Tesco anticipates this segment has a huge potential in the UK in the upcoming years. It would be interesting to see how drone deliveries make the product on call a reality.
British multi-retailer is expected to try drone delivery for grocery items. People still fear and avoid going to public squares or supermarkets. Therefore, drone deliveries appear to be a good proposition given the prevalent conditions in the UK with reference to the rising number of infections in the UK.
Tesco has joined forces with Manna, which is a drone delivery company and would initially try home deliveries of essentials in small quantities within 30 minutes by drone. Tesco is expected to commence trial next month.
Retailers can expand their reach to vulnerable sections of the society using drones. Tesco looks to leverage upon the technology advancement facilitated by Manna, which has a proven track record. However, Manna might have to procure some additional licenses to expand its area of delivery services beyond Ireland.
The retailers are investing in their existing network of operations to achieve economies of scale and bolster their delivery network, which would allow them to lessen the exposure and mitigate risks with reference to Brexit. The retailers have witnessed comparatively lesser impact of coronavirus pandemic on their operations. Leading players of the industry are investing heavily on innovations such as drone delivery, which could be a bright prospect for the industry.
