Tesco raises earnings expectations following strong Christmas trading and market share gains

Tesco (LSE:TSCO) reported a solid trading performance for the 19 weeks ended 3 January 2026, with group like-for-like sales rising 2.9%. Momentum was particularly strong in the UK and Republic of Ireland, where the retailer achieved its highest UK market share in more than ten years. Investment in price, product quality and service levels—especially across fresh food and the premium Finest range—supported a strong Christmas period, double-digit growth in online sales and continued expansion of rapid-delivery through Whoosh.

These gains were partly offset by softer performance in Booker’s tobacco category and the impact of exiting a supply contract. Tesco continued to reinforce its value proposition by extending its Everyday Low Prices initiative to more than 3,000 branded products, alongside Aldi Price Match and Clubcard-led promotions. Fresh-food-focused growth, product innovation and new store openings also contributed to market share improvements in Ireland and Central Europe.

Reflecting this trading momentum, Tesco now expects adjusted operating profit for the 2025/26 financial year to land at the upper end of its £2.9bn–£3.1bn guidance range, pointing to an improved earnings outlook and a strengthened competitive position within a highly competitive grocery landscape.

From a market perspective, Tesco’s outlook is supported by a stable financial base, although some challenges remain around revenue growth and cash flow. Technical indicators point to positive share price momentum, while valuation appears reasonable. Commentary from the latest earnings update was broadly constructive, with upgraded profit guidance and a sizeable share buyback programme further enhancing shareholder value.

More about Tesco plc

Tesco plc is a leading multinational grocery and general merchandise retailer headquartered in the UK. The group operates supermarkets, convenience stores and wholesale businesses across the UK, Ireland and Central Europe. Its core activities include food retail, fresh produce, home and clothing ranges, online grocery and rapid-delivery services, complemented by wholesale and foodservice operations through Booker, with a strong focus on value-led consumers and private-label brands such as its premium Finest range.