Analysts anticipate that Tesco will upgrade its full-year profit guidance when it posts its first-half results on Thursday, having benefited from the good summer weather.
Industry data published by Worldpanel by Numerator (formerly Kantar) earlier this month showed Tesco winning more market share than any other major grocer in the UK. Its sales climbed 7.7% over the 12 weeks to 7th September, its strongest rate since December 2023, giving it a market share of 28.4%, up 0.8 percentage points compared to the same period last year.
In June, the group forecast adjusted operating profit for the year ending February 2026 of between £2.7bn and £3.0bn, down from the £3.13bn achieved in 2024/25.
“We expect a modest lift of the guidance range, perhaps to £2.8bn to £3.0bn, at FY reflecting the strong H1 performance, (and) reflecting a customarily cautious stance,” analysts at Jefferies said.
On average, analysts are forecasting £2.95bn for the full year and £1.56bn for the half year.
Tesco said in April that 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 in an effort to win back market share.
However, Tesco’s strategy of price-matching Aldi on hundreds of key items, together with its Clubcard Prices promotion, has helped it maintain its momentum and see off competition from its rivals.
Shares in Tesco are up 20% so far this year, but analysts also noted concerns about the sector more broadly, including rising food inflation, the possibility of further tax rises in the government’s November budget, declining wage growth, and a weakening jobs market.
NamNews Implications:
In June, the group forecast adjusted operating profit for the year ending February 2026 of between £2.7bn and £3.0bn, down from the £3.13bn achieved in 2024/25.
“We expect a modest lift of the guidance range, perhaps to £2.8bn to £3.0bn, at FY reflecting the strong H1 performance, (and) reflecting a customarily cautious stance,” analysts at Jefferies said.
On average, analysts are forecasting £2.95bn for the full year and £1.56bn for the half year.
Tesco said in April that 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 in an effort to win back market share.
However, Tesco’s strategy of price-matching Aldi on hundreds of key items, together with its Clubcard Prices promotion, has helped it maintain its momentum and see off competition from its rivals.
Shares in Tesco are up 20% so far this year, but analysts also noted concerns about the sector more broadly, including rising food inflation, the possibility of further tax rises in the government’s November budget, declining wage growth, and a weakening jobs market.
NamNews Implications:
- Given economic and political uncertainties, cautious optimism is understandable.
- The issue is how to preserve consumer perception of everything possible being done to manage on-shelf inflation.
- Meanwhile, Asda is surely proving to be less of a threat than anticipated.
- And there are limits to Aldi and Lidl’s capabilities in terms of depth of cuts.
- All making Tesco a safe bet for suppliers and the City…
No comments:
Post a Comment