Tesco, Britain's biggest retailer, has warned that getting ready for a possible disorderly no-deal Brexit in October would be far more problematic than preparations it made for the original planned departure date in March. Britain had been due to leave the European Union on March 29, but Prime Minister Theresa May was unable to get her divorce deal ratified by parliament and the date is now set for October 31.
That is not good timing for Tesco as it falls just ahead of the peak Christmas trading season, Chief Executive Dave Lewis told shareholders on Thursday. The group built a stockpile of over 200 million pounds ($254 million) worth of long-life food products by the end of March to help it cope with any disruptions to supply, he said.
When Brexit did not happen the retailer sold that stock through and it currently does not have any additional stock. "For us to be able to do what we did in March in October will be more difficult because we won't have the space in our logistics system to be able to cope because we'll be preparing for Christmas and the seasonal peaks that are there," Lewis told the annual shareholders' meeting at Tesco's headquarters in Welwyn, north of London, which was webcast.
He reiterated that if there was a disorderly no-deal Brexit, sourcing fresh food would also be a major issue as Tesco imports about 50% of the fresh food it sells. "The question is - is there a delay at the border, is there a tariff (to pay)? That's where the biggest sensitivity for our industry will be," said Lewis. Earlier on Thursday, Tesco reported a slowdown in quarterly sales growth in what Lewis called a subdued home market.