Tesco (LON:TSCO) shares were down on Wednesday after the company issued an updated concerning the outbreak of COVID-19.
Shares in the British retailer were down by 5% during trading on Wednesday.
Tesco said that it is “impossible” to predict the full financial impact that the crisis will have on its business.
However, the retailer has estimated that COVID-19 could cost it up to £925 million.
This includes “significant cost increases in payroll, distribution and store expenses,” Tesco said.
The retailer continued to add that it is unable to provide financial guidance for 2020-2021.
“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 said.
Many businesses have been hit by the outbreak of COVID-19 as the illness continues to spread.
“COVID-19 has shown how critical the food supply chain is to the UK and I’m very proud of the way Tesco, as indeed the whole UK food industry, has stepped forward,” Dave Lewis, Chief Executive, said in a company statement.
“In this time of crisis we have focused on four things; food for all, safety for everyone, supporting our colleagues and supporting our communities.”
“Initial panic buying has subsided and service levels are returning to normal. There are significant extra costs in feeding the nation at the moment but these are partially offset by the UK Business rates relief,” the Chief Executive continued.
Sales at Tesco rose by 30% in the first few weeks of the crisis as significant panic buying occurred.
In order to limit stockpiling, the retailer had introduced a rule of three items per customer on every product line. However, this has now been removed on the majority of its products as stock levels have stabilised.
Tesco has also temporarily closed its cafes, phone shops and fresh food counters.
Shares in Tesco plc (LON:TSCO) were down on Wednesday, trading at -4.64% as of 11:51 BST.