UK supermarkets are not in line for “super profits” writes the FT, despite trading through the coronavirus pandemic. Despite sales - both physical and online - booming and the industry benefiting from the government’s business rated holiday, increased costs associated with keeping staff and customers safe during the pandemic have hit into the already thin margins the grocers were experiencing pre-Covid and will result in little to no profits (The Financial Times £).
Sainsbury’s for example has cautioned its annual profit would stagnate as a jump in costs - expected to exceed £500m - offset a surge in online grocery sales(The Financial Times £). Shoppers flocked online at Sainsbury’s in a bid to avoid the high street, the retailer said in its first quarter results, with online sales more than doubled as the supermarket increased its delivery slots from 370,000 to 650,000 a week (The Telegraph, Sky News). The boom in online sales during the first quarter helped Sainsbury’s buck the trend compared to other high street retailers, delivering a strong debut for its new CEO Simon Roberts (The Times).
Sainsbury’s “must prove it is a shareholder hero in the long run”, writes the FT, despite having demonstrated incredible resilience over the pandemic its shares are up 4% over the past year as compared to players like Ocado, buyers aren’t buying into Sainsbury’s tech and ability to generate increased online sales (The Financial Times £).
Meanwhile The Telegraph argues that the pandemic “could be the making of the big four supermarkets” after a combination of “good fortune and adept manoeuvring” left them thriving in the crisis with retail and online sales jumping (The Telegraph).
John Allan, Tesco’s chairman, will oversee a new Covid-19 economic recovery commission tasked with generating ideas for the recovery of the economy post Covid alongside business leaders such as Heathrow Airport boss John Holland-Kaye, Shell UK’s chair Sinead Lynch, Ruth Cairnie, chair of Babcock International, and Manjoi Badale, co-founder of technology investor Blenheim Chalcot (The Telegraph). The committee’s launch will be announced on Firday with City sources saying Chancellor Rishi Sunak had agreed to endorse its creation although it will not have a formal government mandate (Sky News).
Thousands of retail jobs have been axed in the UK as the government starts to unwind the furlough scheme that has kept millions of workers employed during the pandemic. Further losses were announced by John Lewis, Harrods, Arcadia Group and SPP (The Financial Times £). More than 12,000 people in the UK are set to lose their jobs after a raft of announcements made within the last two days (BBC). All businesses blamed lockdown and social distancing measured for the need to cut staff (Sky News). Unemployment could soon hit 10%, experts have warned, following the latest slate of job cuts in the retail industry (The Times).
John Lewis is to permanently close up to 19 of its stores as it rushed to slash costs and warns staff they will lose out on their prized annual bonus (The Telegraph). Dame Sharon White has told staff to prepare for job cuts, closing down more stores and losing out on the employee bonus to be brought down to zero (The Times).
SSP Group, the owner of Upper Crust and other food travel outlets, has announced it will cut around 5,000 jobs as passenger demand remained at “very low levels” (The Telegraph, The Times). The cuts equal to around half of the company’s workforce and will be mostly focused on the UK where the economy and travel industry had been slower to bounce back from the pandemic (The Guardian, Sky News).
Leading retailers - including Amazon, Morrisons and Marks & Spencer - have teamed up to develop a “decarbonisation road map” to help the industry meat its commitments under the government’s net-zero target. Plans, which still have to be defined, could include putting carbon labels on products declaring their environmental impact (The Telegraph).
Beyond Meat is pushing into the Chinese market for the first time after striking a deal with a supermarket chain owned by Alibaba. Beyond Meat will offer its burgers in 50 Freshippo stores in Shanghai before rolling them out to other cities as it bets the coronavirus pandemic will help cracking the Chinese market were meat prices have soared (The Financial Times £).