Tesco raises profit outlook after growth in H1 FY25/26

Tesco has raised its profit guidance following an uptick in sales across all markets in the first half (H1) of fiscal 2025/2026 (FY25/26)

Group adjusted operating profit at the UK supermarket chain was £1.67bn ($2.24bn) in H1 25/26, up 1.6% at constant rates from £1.65bn in the previous year.

Adjusted diluted earnings per share were 15.43 pence for the 26 weeks ended 23 August 2025, compared with 14.45 pence a year before.

Sales, excluding VAT and fuel, increased 5.1% at constant rates to £33.05bn, while group like‑for‑like (LFL) sales grew 4.3%.

In the UK and the Republic of Ireland, LFL sales increased 4.9%. The retailer attributed the UK growth to targeted price investments, adding that both markets benefitted from warmer weather.

In the Booker segment, LFL sales increased by 1.7% year‑on‑year.

The segment’s adjusted operating profit rose 0.6%, driven by favourable weather and savings from the Save to Invest programme which helped to offset significant operating cost inflation.

Central Europe saw LFL sales grow by 3.4%, driven by growth across all countries. However, the unit’s adjusted operating profit dipped £5m year‑on‑year to £44m.

The decline reflects a reduction in mall income following the sale of mall properties in H2 24/25, increased competition, particularly in Slovakia, and ongoing regulatory pressure.

The retailer’s net debt stood at £9.88bn at the end of H1 25/26, versus £9.52bn in the same period of the previous year..

Tesco CEO Ken Murphy stated: “Our market share gains in the UK are a particular highlight and reflect the decisive action we took at the start of the year to further invest in value, quality and service.

The extension of our savings programme is helping offset new operating cost inflation, including increased National Insurance and other regulatory costs. Sales have grown across all our businesses, with customer satisfaction scores improving once again.”

Looking ahead, Tesco forecasts adjusted operating profit for 2025/26 to be between £2.9bn and £3.1bn, up from its earlier projection of £2.7bn to £3.0bn.

Free cash flow guidance was maintained at between £1.4bn and £1.8bn.

"Tesco raises profit outlook after growth in H1 FY25/26" was originally created and published by Retail Insight Network, a GlobalData owned brand.

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