Tesco has reported its sales are up 30% due to pre-lockdown stockpiling. 

The UK’s biggest supermarket said it is unable to predict the full impact of the pandemic this year, although it highlighted a number of significant costs – including extra payroll, distribution and store expenses – which could add between £650 million and £925 million to costs. 

The company said supply levels have now stabilised after stockpiling had emptied the shelves of various products and it said it is now recording normal sales volumes. 

Dave Lewis, chief executive, said: “In the first few weeks of the crisis, significant panic buying (around a 30% uplift in the UK) cleared the supply chain of certain items. This has now stabilised across the group and more normal sales volumes are being experienced.

“There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK business rates relief.”

It also said it hasn’t furloughed any of its staff but it has currently got 50,000 members of staff absent from work on full pay. It also has to factor in the loss of income from the closure of its cafes, phone shops, meat, fish and deli counters and salad bars. 

It has now recruited more than 45,000 new members of temporary staff to help keep its shelves stocked up and to deal with the increase in online delivery orders. 

He said: “Covid-19 is having a material impact on the operations of our business and we are incurring significant additional costs, particularly in payroll as we recruit additional colleagues to meet demand and cover the work of those colleagues who are absent and being paid.

“While the full financial impact of the crisis for 2020/ 21 is impossible to predict with a high degree of certainty, we have considered a range of scenarios to understand potential outcome on our business and plan appropriately. Dependent on the scenario, the estimated impact on our retail cost lines is between £650 million and £925 million including significant cost increases in payroll, distribution and store expenses.

“At this stage it would not be prudent to provide financial guidance for 2020/ 21, however if customer behaviour were to return to normal by August it is likely that the additional cost headwinds incurred in our retail operations would be largely offset by the benefits of food volume increases, twelve months’ business rates relief in the UK and prudent operations management.”

Tesco has increased Grocery Home Shopping capacity by 20% in the last two weeks, adding 145,000 slots. 

Lewis said: “In this time of crisis we have focused on four things; food for all, safety for everyone, supporting our colleagues and supporting our communities.”