Tesco on Thursday followed rivals in reporting buoyant Christmas trading, as pandemic restrictions meant people splashed out on celebrations at home.
The group said UK like-for-like sales growth was 6.7 per cent in its third quarter to 28 November, accelerating to 8.1 per cent in the six weeks to 9 January.
“We delivered a record Christmas across all of our formats and channels,” said CEO Ken Murphy, who succeeded Dave Lewis in October.
Tesco’s update follows strong Christmas trading reports from Sainsbury’s, Morrisons and Lidl.
Industry data published last week showed the sector benefited from unprecedented Christmas demand, with shoppers spending £11.7 billion on groceries in December.
Restrictions to contain the virus mean many people are working from home and the hospitality sector is closed.
Adding to the demand for food and drink, many of the five million or so Britons who normally travel abroad for Christmas had to stay at home.
Tesco estimated additional COVID-19 costs would be £810 million in its 2020-21 year, up from £725 million forecast in October.
But it still maintained its guidance for 2020-21 retail operating profit before exceptional items of “at least” the same level as 2019-20’s, excluding the repayment of £535 million of business rates relief.
Tesco also continues to expect to report a loss for Tesco Bank of £175-200 million for the year.