By James Davey
LONDON (Reuters) -Tesco, Britain’s biggest supermarket group, reports first half results on Thursday, with analysts anticipating an upgrade to full-year profit guidance on the back of strong spending on food over an unusually hot summer.
Industry data published by Worldpanel by Numerator (formerly Kantar) earlier this month showed Tesco winning more market share than any other UK grocer.
The data showed Tesco’s sales rose 7.7% over the 12 weeks to September 7, its highest rate since December 2023, giving it a market share of 28.4%, up 0.8 percentage points on the year.
TESCO BATTLING A STEP-UP IN ‘COMPETITIVE INTENSITY’
Shares in Tesco are up 20% so far this year, according to Jefferies analysts, “an upgrade to come at Tesco, largely factored in.”
In June, the group forecast adjusted operating profit, its preferred measure, for the year ending February 2026 of between 2.7 billion pounds and 3.0 billion pounds ($3.6 billion-$4.0 billion), down from the 3.13 billion pounds achieved in 2024/25.
“We expect a modest lift of the guidance range, perhaps to 2.8 billion pounds to 3.0 billion pounds, at FY reflecting the strong H1 performance, (and) reflecting a customarily cautious stance,” the Jefferies analysts said.
Analysts are on average forecasting 2.95 billion pounds for the full year and 1.56 billion pounds for the half year.
Tesco had said in April it expected profit to fall in its 2025/26 year as it set aside cash to deal with a step-up in “competitive intensity” – a reference to a pledge of sustained price cuts from Asda, the number three player, which has been losing market share.
Most analysts think Tesco’s strategy of matching the prices of discounter Aldi on hundreds of key items, together with heavy promotion of its Clubcard loyalty scheme, which provides lower prices for members, is working well.
But they do have some concerns about the sector more broadly, including rising food inflation, the possibility of more tax rises in the government’s November budget, declining wage growth and a weakening jobs market.
($1 = 0.7490 pounds)
(Reporting by James Davey. Editing by Mark Potter)
