Tesco has lifted its full-year profit guidance after reporting stronger-than-expected sales growth, with the supermarket giant crediting its investment in value and quality for helping it win market share despite tough competition and ongoing consumer pressures.
Britain’s biggest grocer said on Thursday it now expects adjusted operating profit for 2025/26 in the range of £2.9 billion to £3.1 billion, up from its previous forecast of £2.7 billion to £3 billion. The new target, while below the £3.13 billion earned in 2024/25, reflects growing momentum as the company heads into the critical Christmas trading season.
Chief executive Ken Murphy said the group was optimistic about festive sales despite ongoing strain on household budgets and fears of tax hikes in the government’s upcoming budget. “We are actually betting on a good Christmas, we have a lot of confidence in the strength of our offer,” he told reporters. He also urged Finance Minister Rachel Reeves to deliver a “pro-growth and pro-jobs” budget on 26 November.
For the first half of the year to 23 August, UK like-for-like sales rose 4.9%, supported by strong demand for food and value ranges. Tesco’s Irish division also recorded robust performance, with sales up 4.8%. Geoff Byrne, CEO of Tesco Ireland, said the business had continued to grow despite inflation, citing the expansion of Aldi Price Match lines, Clubcard promotions, and rapid delivery through its Whoosh service. The addition of three new stores in Dublin, Cork, and Cavan further boosted growth.
Shares in Tesco rose 3% following the announcement, extending year-to-date gains to 20%. The company now holds 28.4% of Britain’s grocery market, the highest among its peers. Industry data published last month confirmed Tesco was the fastest-growing supermarket in terms of market share gains.
Murphy attributed the strong performance to decisive action early in the year, including sustained investment in value, quality, and customer service. Tesco’s strategy of matching discounter Aldi’s prices on more than 600 products, combined with aggressive promotion of its Clubcard loyalty scheme, has been central to its growth. Analysts say the approach has helped shield Tesco from the price war triggered by rivals such as Asda, which pledged sustained cuts but has since lost market share.
First-half adjusted operating profit rose 1.5% to £1.67 billion. Analysts at Bernstein noted Tesco’s cautious outlook, saying the company’s second-half guidance suggested greater margin pressure than in the first half.
Alongside store sales, Tesco continues to expand digital operations, including its Marketplace platform and retail media division, while increasing personalised engagement with customers through data-driven services.
“Competitive intensity remains elevated,” the group said in its statement. “However, a better-than-expected customer response to our actions and an extended period of good weather have helped offset the cost of our investments.”
