Tesco PLC (LSE:TSCO) said it now expects to deliver profits at the upper end of City expectations after a strong third quarter and Christmas period, helped by market share gains, robust fresh food sales and rapid growth online.
Britain’s biggest supermarket group said on Thursday that it expects full-year adjusted operating profit for 2025/26 to come in at the top end of its previously stated £2.9 billion to £3.1 billion range. It also reiterated guidance for free cash flow of between £1.4 billion and £1.8 billion.
The update came alongside a trading statement covering the 19 weeks to early January.
Like-for-like sales, which strip out the impact of new stores and fuel and are a key measure of underlying performance, rose 2.9% across the group. In the UK and Ireland, sales were up 3.8%, while UK sales alone grew 3.7%.
Ken Murphy, chief executive, said the company had delivered “a strong Christmas” as shoppers responded to investments in pricing, product quality and service.
Tesco recorded its highest UK grocery market share in more than a decade, according to industry data, with gains sustained over 32 consecutive four-week periods.
Fresh food was a particular highlight, with UK like-for-like sales up 6.6% as Tesco pushed value offers alongside its premium Finest range. Sales of Finest products rose 13%, with party food up 22%. The retailer launched 340 new or improved own-brand Christmas lines, more than half of them under the Finest label.
Online also performed strongly. UK online sales rose 11.2% over the period, supported by extra delivery slots ahead of Christmas. Whoosh, Tesco’s rapid delivery service added more than 250,000 new customers, with sales up sharply.
Tesco said competition remained intense and that value continued to matter to customers. This week it expanded its Everyday Low Prices scheme to more than 3,000 branded products, alongside Aldi Price Match on over 650 lines and discounts for Clubcard members.
Outside the UK, Ireland delivered like-for-like sales growth of 4.6%, driven by fresh food and new store openings. In Central Europe, sales rose 1.0%, with strong online growth and double-digit gains in the Finest range offsetting tougher pricing conditions.
At Booker, Tesco’s wholesale arm, underlying catering sales rose 2.4%, although overall performance was held back by a decline in tobacco sales and the exit from a lower-margin contract.
Murphy said Tesco was “well positioned for the year ahead”, adding that the focus would remain on helping customers “make their money go further” while continuing to invest in the business.
Tesco’s financial year includes an extra trading week, but the company said all guidance is given on a comparable 52-week basis.