Britain’s biggest retailer Tesco (TSCO) delivered sales growth across all markets in FY26. The supermarkets giant is now sitting on its highest UK market share in over a decade.
FY26 results revealed better-than-expected profits. And Tesco also treated investors to a fresh £750 million share buyback.
While the groceries goliath warned about the ‘uncertainty’ arising from the war in Iran, the shares ticked higher in early dealings.
Profit beat
For the year to February 2026, group sales excluding fuel grew 4.6% to £66.6 billion with like-for-like sales up 3.5%.
Tesco reported growth across the board. UK like-for-like sales rose by a better-than-expected 4.2%. Sales were ahead in Central Europe, the Republic of Ireland and in the Booker wholesale business.
The supermarkets titan posted an adjusted operating profit of £3.15 billion. That was up 0.6% year-on-year and above Tesco’s own guidance of between £2.9 billion and £3.1 billion.
At this stage, Tesco expects to deliver FY27 adjusted operating profit of between £3 billion and £3.3 billion. Free cash flow of between £1.5 billion and £2 billion is expected.
Middle East alert
‘We are committed to doing whatever we can to help keep down the cost of the weekly shop, and with the conflict in the Middle East creating further uncertainty for consumers and the economy more broadly, that commitment matters more than ever,’ said CEO Ken Murphy.
‘Over the last year, despite cost pressures from new regulation, we have increased our investments in keeping prices low, further improving quality and offering even better service.’
Playing to win
Tesco’s UK market share hit 28.5%, up 0.24% year-on-year and the highest level in more than a decade. Across the last three years, Tesco has now increased its market share by 1.22%. That is despite intense competition from discounters Aldi and Lidl.
The retailer insisted: ‘We will continue to do whatever we can to deliver the very best prices, quality and service for our customers, and are targeting a further £500 million saving this year through our Save to Invest programme, to help fund investments in our customer offer.’
Tesco continues to demonstrate its defensive qualities. The company has done well to grow its market share in a fiercely competitive market with consumers facing persistent cost-of-living pressures.
Despite the uncertainty arising from the Middle East conflict, Tesco remains confident in continuing to deliver strong future cash flows. In addition to paying out £937 million worth of dividends last year, the retailer completed a £1.45 billion share buyback.
The launch of a further £750 million buyback demonstrates management’s confidence in the group’s prospects.
Read the press release here: https://www.tescoplc.com/investors
You might also like these stories:
