Tesco defends £ 315m dividend to shareholders amid the boom in online shoppers during the pandemic – although business rates have fallen by £ 249m since the outbreak began
- Tesco grocery online sales doubled and pre-tax profits rose during the pandemic
- Supermarket finance director says shareholders are "right"
- Tesco has received a £ 249 million discount from the government
Tesco has defended its plans to pay shareholders a dividend of £ 315million, despite the company having seen a £ 249million business rate cut since the outbreak began.
Online grocery sales doubled and pre-tax profits rose during the crisis. The UK's largest supermarket saw its pre-tax profit increase 28.7 percent to £ 551 million in the six months to the end of August.
New CEO Ken Murphy was dubbed "the greatest in our history for home delivery" last week, and Alan Stewart, the supermarket's finance director, said paying dividends to shareholders was "the right thing".
The half-yearly dividend that Tesco pays out is 20 percent higher than in 2019.
Mr Stewart announced that Tesco's coronavirus costs would be £ 725 million over a full year while the interest relief would be £ 532 million.
The supermarket saw a huge surge in online sales during the pandemic (photo in stock)
The costs associated with the pandemic include the security measures installed in the branches and the hiring of thousands of new employees.
The government introduced the relief to stimulate retailers as the lockdown began.
"We've incurred very, very significant additional costs to run the business over the year," said Stewart. "With the purpose of feeding the people and supporting government initiatives against the vulnerable, the performance of the company should be measured."
Murphy, 53, who joined the company last week, used his opening speech to pay a credit to his predecessor, Dave Lewis, 55, who had run Tesco since 2014.
He said, "If we hadn't had our house in such good shape, we wouldn't have been able to respond to Covid the way we did."
Tesco said it was compounded by the dramatic change in consumer behavior since the pandemic began.
New General Manager Ken Murphy was dubbed "the greatest in our history for home delivery" last week.
The change has resulted in larger weekly shopping trips and a rapid increase in the demand for online delivery.
Positive Money, a campaign group, criticized Tesco's move. Fran Boait, its chief executive officer, told the Guardian, "There must be conditions in place to ensure that any company that receives public support in times of crisis does not waste money paying dividends to wealthy shareholders."
The New Economics Foundation think tank also struck the supermarket. Sarah Arnold said, “If Tesco can accept this relief and then turn around and pass the benefit directly on to shareholders, it shows that the system is not fit for purpose – public funds should not be recorded as private gain. "
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