Tesco (LSE:TSCO) reported a 6.3% increase in adjusted operating profit to £1.78 billion for the first half of its 2026/27 financial year, alongside higher sales, earnings and free cash flow.
The supermarket group recorded sales excluding VAT and fuel of £33.8 billion, representing growth of 1.6% at constant exchange rates. The company attributed its performance to changes in its sales mix, cost reductions and contributions from additional revenue streams.
Adjusted diluted earnings per share increased 12.2% compared with the corresponding period last year, while free cash flow rose 21% to £1.57 billion. Tesco also reported a reduction in net debt compared with the prior-year period.
Following the first-half performance, the retailer increased its share repurchase target for the current financial year to £950 million and announced a higher interim dividend.
Tesco said customer satisfaction reached a record level during the reporting period, supported by its pricing strategy, product development and expansion of digital shopping services.
Online sales increased 8%, reflecting continued activity across the group’s grocery delivery operations. Tesco also reported growth in its Whoosh rapid delivery service and expanded its delivery arrangements through partnerships with Uber Eats and Deliveroo.
The company continued to invest in digital capabilities, including the use of artificial intelligence for personalised customer services and product recommendations.
Other areas of development included Tesco’s retail media activities and its range of non-food products and services, which provide additional revenue opportunities alongside its core grocery operations.
Management identified cost savings, operational efficiency and the development of additional income streams as factors contributing to the group’s first-half financial performance.
Tesco’s latest results also reflect its ongoing capital allocation activities, with increased shareholder distributions through the expanded buyback programme and interim dividend.
Tesco plc is a multinational grocery and general merchandise retailer operating primarily in the UK, Ireland and Central Europe. Its activities include supermarket retailing, online grocery services, rapid delivery and wholesale distribution through Booker.
The group also operates across clothing, pharmacy, financial services and telecommunications, alongside its principal food retailing business.
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