British supermarket chain Tesco saw its first-half profits rise by more than a quarter as customers stocked up on essentials during the pandemic and online orders doubled.
However, a jump in food sales was outweighed by crisis costs and losses at the company's bank causing its operating profit to plummet.
The UK’s biggest supermarket by sales reported pre-tax profit for the 26 weeks to August 29 of £551 million ($712.29m), a rise of 8.7 per cent on the same period in 2019, as the crisis triggered major changes in how the nation shops for groceries. The company’s operating profit figures told a different story though, falling 15.6 per cent to £1.037 billion, with Tesco Bank one of the factors dragging down the balance sheet with a loss of £155m.
"The first half of this year has tested our business in ways we had never imagined, and our colleagues have risen brilliantly to every challenge, acting in the best interests of our customers and local communities throughout,” said Ken Murphy, Tesco’s new chief executive.
Like many of its competitors, Tesco was forced to overhaul its strategy to ensure customers could access food at the height of the pandemic in March and April when many British residents were confined to their homes in a nationwide lockdown.
The company more than doubled its delivery capacity to 1.5 million slots a week during the first half of the year. While food sales rose by 9.2 per cent during the period, clothing fared less well, with sales down 17.2 per cent.
The supermarket also spent £533m on upgrading safety measures at its stores and warned of mounting losses at its bank as the country’s faltering economy takes its toll on consumers’ finances.
Tesco said the crisis has had a “material impact” on the performance of the bank because it issued fewer loans and credit cards, and set aside more money for bad debts. This resulted in an operating loss of £155m compared with a profit of £87m last year.
“A marked deterioration in macroeconomic indicators, particularly UK unemployment and gross domestic product, drove an increase in the provision for potential bad debts,” Tesco said.
This is Tesco’s first set of results under its new chief executive Ken Murphy, who joined the company a week ago.
Mr Murphy said there are “no plans for further retrenchment” of Tesco's overseas interests after the company expects to complete the sale of its Thailand and Malaysia businesses this year and the sale of its Polish business next year. Tesco does not operate any stores in the Middle East.
"Right now I'm just really focused on getting to know these businesses, getting to meet the team in central and eastern Europe when I'm allowed to travel and really understanding the drivers of that business," he said.
Investors responded positively to Tesco's half-year results, with the stock up 2.24 per cent at 9.53am London time on Wednesday.
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
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MATCH INFO
Uefa Champions League, Group B
Barcelona v Inter Milan
Camp Nou, Barcelona
Wednesday, 11pm (UAE)
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Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
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Most sought after workplace benefits in the UAE
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Killing of Qassem Suleimani
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RESULT
Huddersfield Town 1 Manchester City 2
Huddersfield: Otamendi (45' 1 og), van La Parra (red card 90' 6)
Man City: Agüero (47' pen), Sterling (84')
Man of the match: Christopher Schindler (Huddersfield Town)
What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
The National in Davos
We are bringing you the inside story from the World Economic Forum's Annual Meeting in Davos, a gathering of hundreds of world leaders, top executives and billionaires.
Other promotions
- Deliveroo will team up with Pineapple Express to offer customers near JLT a special treat: free banana caramel dessert with all orders on January 26
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- Australian Vet in Abu Dhabi (with locations in Khalifa City A and Reem Island) will have a 15 per cent off all store items (excluding medications)
UAE currency: the story behind the money in your pockets
Electric scooters: some rules to remember
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Engine: 2-litre or 3-litre 4Motion all-wheel-drive Power: 250Nm (2-litre); 340 (3-litre) Torque: 450Nm Transmission: 8-speed automatic Starting price: From Dh212,000 On sale: Now
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Pharaoh's curse
British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
He had been in poor health for many years after a car crash, and a mosquito bite made worse by a shaving cut led to blood poisoning and pneumonia.
Reports at the time said Lord Carnarvon suffered from “pain as the inflammation affected the nasal passages and eyes”.
Decades later, scientists contended he had died of aspergillosis after inhaling spores of the fungus aspergillus in the tomb, which can lie dormant for months. The fact several others who entered were also found dead withiin a short time led to the myth of the curse.
The specs
Engine: 4.0-litre flat-six
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Transmission: 7-speed PDK auto or 6-speed manual
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Killing of Qassem Suleimani
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
