Tesco's checkout-free store in London, Britain, October 18, 2021. - Reuters
LONDON: Tesco, Britain’s biggest supermarket group, reports first-half results on Thursday, with analysts anticipating an upgrade to full-year profit guidance on the back of strong spending on food over an unusually hot summer.
Industry data published by Worldpanel by Numerator earlier this month showed Tesco winning more market share than any other UK grocer.
The data showed Tesco’s sales rose 7.7% over the 12 weeks to Sept 7, its highest rate since December 2023, giving it a market share of 28.4%, up 0.8 percentage points on the year.
Shares in Tesco are up 20% so far this year, according to Jefferies analysts, “an upgrade to come at Tesco, largely factored in”.
In June, the group forecast adjusted operating profit, its preferred measure, for the year ending February 2026 of between £2.7bil and £3bil (US$3.6bil to US$4bil), down from the £3.13bil achieved in 2024/25.
“We expect a modest lift of the guidance range, perhaps to £2.8bil to £3bil, at full year reflecting the strong first-half performance, and reflecting a customarily cautious stance,” the Jefferies analysts said in note.
Analysts are on average forecasting £2.95bil for the full year and £1.56bil for the half year.
Tesco had said in April it expected profit to fall in its 2025/26 year as it set aside cash to deal with a step-up in “competitive intensity” – a reference to a pledge of sustained price cuts from Asda, the number three player, which has been losing market share.
Most analysts think Tesco’s strategy of matching the prices of discounter Aldi on hundreds of key items, together with heavy promotion of its Clubcard loyalty scheme, which provides lower prices for members, is working well.
But they do have some concerns about the sector more broadly, including rising food inflation, the possibility of more tax rises in the government’s November budget, declining wage growth and a weakening jobs market.
Tesco is a British multinational groceries and general merchandise retailer with its headquarters in Welwyn Garden City, England.
The firm was founded by Jack Cohen in Hackney, London, in 1919 and in 2011, it was the third-largest retailer in the world – measured by gross revenues. — Reuters
