Supermarket Profits During Covid.

Speaking to a bloke who looked like Elvis about this- we chatted about Tesco, Asda , Morrisons, Sainsbury's and Aldi's profits

It was a Lidlless Converstaion ..... sorry I'll get my coat!

 

Oh no you won't. You won't be stopping long enough to get your coat after that one. Go on, get out!

 

I don't think big companies like this can fiddle their books without risking massive punitive fines from HMRC. They have to file accurate statements of accounts on time every year otherwise they are in big trouble. I could possibly believe that one of them might try it on and get away with it at the margins, but for all of them to submit significantly false accounts? I don't think so.

 

Sorry sir....

 

They make a lot of their cash from the petrol they sell and that has been hit massively with people not driving around.

 

Prices to wholesale gave spiralled because of Brexit and not all of this has (yet) been passed onto customers. Hence the muted profits.

 

I agree. Retail is shifting even more than it already was to two groups: Cheap and cheerful large scale or small and specialist. There's going to be less of a market for shops like John Lewis and Waitrose in the coming years, because they try to be expensive and somewhat high end while also selling a large amount of items.

I buy all my meat, fish, fruit, veg etc. from small independents that deliver it. The only things we do supermarket shops for these days are toiletries and drinks really.

 

You're missing out. Aldi is the best combination of quality and price by miles these days.

 

Turnover will give a much better idea of the effect of the policies to counteract Covid-19. How much money was spent at these places. I'd be very surprised if that didn't rise markedly for the reasons you state. Profit is subject to spend and accounting, and not a very good indicator of the amount of business done.

 

I tried to resist, but the pure mention of accounts and I can’t resist a comment.

Tesco turnover 2020/21 was up 7% to 53bn. So sales were up but operating profit was down from £2.3bn to £2bn. (This is just the retail profit excluding Tesco bank). Sales growth across all lines but over 60% online.

They did repay £535m of business rates relief they received but that would have been a net zero as that was an extra benefit they repaid. The operating costs were inflated by nearly £900m through direct COVID expenditure.

So the story for Tesco is sales up, costs up, profit down, but there are positives in that a large part of COVID costs were staff costs meaning extra payments and new jobs.

 

Paying back debt doesn't affect profit except in respect of a possible reduction in interest charges in the accounts which would increase profits.