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Tesco investors expect boost in boss’s final annual results

Dave Lewis is set to step down this year.

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Dave Lewis has run the UK’s biggest supermarket for just under six years (Joe Giddens/PA)

Dave Lewis has run the UK’s biggest supermarket for just under six years (Joe Giddens/PA)

Dave Lewis has run the UK’s biggest supermarket for just under six years (Joe Giddens/PA)

Tesco boss Dave Lewis is expected to guide the supermarket giant to higher profits in his final full-year leading the firm.

The supermarket giant is predicted to post a surge in pre-tax profits to £1.85 billion for the year to February, up from £1.56 billion last year.

It will be the final full-year for Mr Lewis, who has been credited with stabilising Tesco in his nearly six years in the role, before he heads for the exit.

Shares in Tesco are largely in line with its position twelve months ago, despite the FTSE 100 diving in the face of the coronavirus pandemic.

We ... believe Tesco is best positioned to respond to any demand spikes related to Covid-19Goldman Sachs

Supermarket stocks, such as Tesco, have been broadly resilient as panic buying of essential items, such as pasta, flour and toilet roll, has helped to drive a surge in sales.

Russ Mould, at investment platform AJ Bell, said that the jump in sales has provided “some respite from the market share war with Aldi and Lidl as punters flock through (Tesco’s) doors so they can stock up”.

Grocers dealt with record levels of demand in March, according to figures from Kantar.

The survey showed that Tesco sales were particularly strong, jumping 5.5%, behind Sainsbury’s which was the best performer among the traditional four supermarkets.

Analysts at Goldman Sachs said: “With the largest UK online grocery business and the broadest network of distribution points, we also believe Tesco is best positioned to respond to any demand spikes related to Covid-19″.

Experts have predicted that the ordinary dividend will jump 10% to 9.13p per share.

Analysts at Exane BN Paribas said that this set of results was originally likely to be “quite a dull update”, until coronavirus hit.

They added: “Whilst it is well understood that the food retailers have seen a surge in sales as a result of Covid-19, the impact on earnings and the longer-term is more complicated.”

Although they have been buoyed by high sales in recent weeks, supermarkets such as Tesco are likely to start feeling the pinch when their staff start calling in sick, the analysts said.

They also warned that although customers were queuing to stock up, the in-store experience is unpleasant.

“Once inside, you don’t want to hang around. That is almost certainly impacting discretionary spend and encouraging customers to focus on the basics,” they said.

PA