Tesco defends £315MILLION dividend to shareholders on the back of boom in online shoppers during the pandemic – despite getting business rates break worth £249m since outbreak began
- Online Tesco food sales doubled and pre-tax profits surged during the pandemic
- Supermarket’s finance director says paying shareholders ‘the right thing to do’
- Tesco has enjoyed a business rates break from the government worth £249m
Tesco has defended its plans to pay a £315 million dividend to shareholders despite the company enjoying a business rates break worth £249m since the outbreak began.
Online food sales doubled and pre-tax profits surged during the crisis, with the UK’s largest supermarket posting a 28.7 per cent rise in pre-tax profits to £551 million in the six months to the end of August.
New chief executive Ken Murphy hailed last week as the ‘biggest in our history for home delivery’ and Alan Stewart, the supermarket’s finance director, said paying dividends to shareholders was ‘the right thing to do’.
The half-year dividend Tesco is paying out is 20 per cent bigger than in 2019.
Mr Stewart revealed that, over a full year, Tesco’s coronavirus-related costs would add up to £725m while the rates relief would be worth £532m.
The supermarket enjoyed a huge surge in online sales during the pandemic (stock photo)
The costs related to the pandemic include the safety measures installed across stores and the hiring of thousands of new members of staff.
The government introduced the relief to boost retailers at the start of lockdown.
‘We have incurred very, very significant extra cost in running the business in the year,’ said Mr Stewart. ‘It is against a backdrop of keeping people fed and supporting government initiatives against the vulnerable, that the business’s performance should be measured.’
Mr Murphy, 53, who joined the business last week, used his opening remarks to pay credit to his predecessor Dave Lewis, 55, who had run Tesco since 2014.
He said: ‘If we didn’t have our house in such good order we wouldn’t have been able to respond to Covid in the way we have done.’
Tesco said it has been boosted by the dramatic change in consumer behaviour since the pandemic began.
New chief executive Ken Murphy hailed last week as the ‘biggest in our history for home delivery’
The change has led to larger, weekly shopping trips and a rapid spike in demand for online deliveries.
Positive Money, a campaign group, criticised the Tesco move. Fran Boait, its chief executive, told the Guardian: ‘There needs to be conditions to ensure that any company receiving public support in a time of crisis isn’t wasting money on paying out dividends to wealthy shareholders.’
The New Economics Foundation thinktank also slammed the supermarket, with Sarah Arnold saying: ‘For Tesco to accept this relief, and then be able to turn around and pass the benefit straight on to shareholders, shows that the system is not fit for purpose – public funds should not be captured as private profit.’