Tesco CEO Dave Lewis has warned UK supermarkets do not have the capacity to safeguard against food shortages in the event of a no-deal Brexit in October.
Lewis, who revealed Tesco had “sold down” the stockpiles it had gathered in March, before April’s deadline was extended, said the lack of warehouse space in the run-up to Christmas meant the prospect of the UK crashing out without a deal at Halloween was far worse timing for retailers.
Retailers and suppliers spent millions building up surplus supplies of non-perishable food in the run-up to the original 29 March Brexit deadline, only for the government to agree an extension with the EU amid deadlock in the House of Commons.
However, with several of the Conservative Party leadership candidates saying they would be willing to entertain a no deal in October, fears have been rising that this time the industry will not have the same capacity.
“We did build stocks in March and we’ve sold down that stock since the original deadline passed,” Lewis said.
“At the present moment in time we are not doing anything. October will present more challenges as in October we will be approaching the Christmas peak.
“It’s about sheer potential capacity, In March it’s a fairly calm period and there is more spare capacity. In October there’s less spare capacity.”
The Tesco warning comes a day after the FDF warned MPs a Halloween Brexit would be the worst possible time for the food and drink industry because of its reliance on imports in the winter season.
Lewis also warned of storm clouds on the horizon for consumer confidence, which he said was “subdued” both because of the political backdrop of Brexit but also because of the bad weather.
However, Lewis stressed Tesco had “outperformed” the UK market, despite a slowdown in its sales growth.
UK like-for-like sales rose 0.4% in the 13 weeks to 25 May, making it 14 straight quarters of growth, though total UK sales were down 0.4%, including last year’s closure of Tesco Direct.
Tesco reported online food sales were up 7% year on year in the period and despite the generally bad weather said its convenience stores had their biggest-ever sales figures on Easter Sunday.
Lewis said: “There is some weakness in consumer sentiment. Clearly part of that is determined by the political situation and part of it by the weather. But we are not seeing any change in core buying patterns.”
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