By Sabela Ojea 



  Tesco PLC said Friday that like-for-like sales growth was 7.9% in the first quarter of fiscal 2021 and warned of closing the financial year with Tesco Bank reporting a significant operating loss due to a rise in provisions for potential bad debts. 


  The U.K.'s biggest grocer by market share said group sales were 13.38 billion pounds ($16.62 billion) in the quarter ended May 30. 


  The company said that the U.K. and Republic of Ireland contributed GBP12.21 billion in revenue during the period, which represents a 8.2% increase on a like-for-like basis. 


  The London-listed company also said that U.K. online grocery sales were up from around 9% to over 16% of its total U.K. sales. It added that online sales run rate shows a growth in sales of around GBP2 billion this year. 


  Regarding its Tesco Bank business, the grocer said that it expects to report an operating loss of between GBP175 million and GBP200 million for the financial year after posting GBP198 million in sales for the first quarter. 


  Tesco said April 8 that it expected to book costs of between GBP650 million and GBP925 million, which included a rise in costs in payroll, distribution and store expenses. In total, it now said that it anticipates incremental costs for the U.K. for fiscal 2021 of GBP840 million. 


  "In just five weeks, we doubled our online capacity to help support our most vulnerable customers and transformed our stores with extensive social distancing measures so that everyone who was able to shop in store could do so safely," Chief Executive Dave Lewis said. 


  Write to Sabela Ojea at sabela.ojea@wsj.com; @sabelaojeaguix