TSCDY Tesco PLC (PK)

By Adriano Marchese

Tesco PLC's (TSCO.LN) stock supply could face added strain with the Brexit deadline pushed back to October 31, a period when retailers traditionally begin preparations for the holiday season.

The new deadline for the U.K. and the EU to agree on exit terms poses a logistical challenge for Tesco--the largest U.K. grocer by market share--as it falls around the crucial time when retailers start to stock up for the Christmas season.

For the original Brexit date on March 29, Tesco, like many other retailers, had prepared its stockpiles of "long-life" categories goods such as canned food, dried rice and pasta. "In March, for 'long life' things, we did take some stock in order to help our customers through that time of turbulence," Tesco Chief Executive Dave Lewis has said in an interview with the BBC.

With an October deadline however, the need to stockpile "long-life" supplies for Brexit could further affect the retailer's already strained logistics system as it readies its stores for the holiday season.

"It will be more difficult to do that in October, because all of the network will be full of the things getting ready for Christmas, so there will be less capacity," added Mr. Lewis.

Since half of Tesco's products are imported, a no-deal Brexit could interrupt timely shipments as potential delays and backlogs at the border hold up deliveries.

"We do import 50% of our food and we don't know what the border arrangements would be, nor what the trade arrangements would be," noted Mr. Lewis.

"It depends what a no-deal means--if there's a problem at the border, if there's a problem with tariffs, then there could be interruption," Mr. Lewis said. "We'll do whatever is practical depending on how things develop between now and then."

Write to Adriano Marchese at adriano.marchese@dowjones.com

(END) Dow Jones Newswires

July 03, 2019 10:41 ET (14:41 GMT)

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