'The secret of Tesco', profits continue to surge as online orders double,

Supermarket giant Tesco has seen first-half profits rise by more than a quarter as customers bought more food during the pandemic and online orders doubled.

With more customers turning to online shopping, Tesco more than doubled delivery capacity to 1.5 million slots a week during the first half, including serving 674,000 vulnerable customers.

While demand for food rose, clothing fared less well, with sales down 17.2%.

Like many of its rivals, Tesco was forced to overhaul its strategy in-store and online amid the coronavirus lockdown.

Tesco today has announced that it is repaying the £585m worth of business rates relief that it received as support during the coronavirus pandemic.

The supermarket giant said the help to retailers had been a "game-changer" and hugely important at the time.

However, it added that its business had proven "resilient" and it had now decided to return the money in full.

"We will work with the UK government and devolved administrations on the best means of doing that," it said.

Business rates relief was extended to all retailers as part of a package of measures announced in March.

At that time, there was "a real and immediate risk to the ability of supermarkets to feed the nation", Tesco said.

"We are immensely grateful for the financial and policy support provided to us by the governments of the UK. This was a game-changer and allowed us to ensure customers got access to the essentials they needed," it added.

Tesco said the money meant that it had had the immediate confidence, in the face of significant uncertainty, to invest in colleagues and support its customers and suppliers.

"Every penny of the rates relief we have received has been spent on our response to the pandemic. Our latest estimate at our interim results in October was that Covid would cost Tesco [about] £725m this year - well in excess of the £585m rates relief received.

"Ten months into the pandemic, our business has proven resilient in the most challenging of circumstances. While all businesses have been impacted - many severely so - we have been able to continue trading throughout, serving many millions of customers every day and although uncertainties still exist, some of the potential risks faced earlier in the year are now behind us."

Chief executive Ken Murphy said: "Giving this money back to the public is absolutely the right thing to do by our customers, colleagues and all of our stakeholders."

The supermarket said it was increasing its interim dividend by 21% to 3.2p a share.

It also named a new chief financial officer, Imran Nawaz, who is joining from Tate & Lyle. He will succeed Alan Stewart, who is retiring in April.

"In spite of these positive results, Tesco will still have concerns after its valuation dropped below Ocado," said Julie Palmer, partner at Begbies Traynor.

And even though Dave Lewis had left "a well-oiled machine" behind him, it would not be an easy ride for Mr Murphy as the new chief executive, she added.

"Facing a pandemic, an economic recession and an exit from the EU all at once is not the ideal recipe for success in anyone's book.

"However, add in growing competition from challenger brands such as Aldi with a new click-and-collect service, the M&S partnership with Ocado and the looming juggernaut of Amazon entering the field of play, and getting through this period with its position intact will be no mean feat."