Tesco Trading Update Lifts Profit Outlook
Tesco trading update lifted FY profit expectations to the upper end of guidance after a strong Christmas but shares fell 5% amid Booker weakness.
KEY TAKEAWAYS
- Tesco had raised FY adjusted operating profit expectation to the upper end of its prior £2.9-3.1 billion range.
- Group like-for-like sales over 19 weeks had risen 2.9%, driven by fresh food and online growth.
- Booker like-for-like sales had fallen 1.3%, tempering investor reaction despite the upgraded outlook.
HIGH POTENTIAL TRADES SENT DIRECTLY TO YOUR INBOX
Add your email to receive our free daily newsletter. No spam, unsubscribe anytime.
Tesco PLC (TSCDY) said on Jan. 8, 2026, that strong third-quarter and Christmas like-for-like sales raised its full-year adjusted operating profit expectation to the upper end of its prior £2.9–3.1 billion range. However, weaker sales from its wholesale arm Booker tempered investor sentiment.
Trading Results and Guidance
The trading update covered the 19 weeks to Jan. 3, 2026, including the 13-week third quarter ending Nov. 22, 2025, and a six-week Christmas period. Group like-for-like sales excluding fuel rose 3.1% in Q3, 2.4% over Christmas, and 2.9% across the full period.
Tesco raised its profit outlook following strong Christmas trading and market-share gains. It reiterated expectations for group free cash flow within its medium-term range of £1.4–1.8 billion, noting free cash flow exceeded £1.6 billion in the first half, with cash generation typically weighted to the first half of the year.
The statement disclosed no new mergers, acquisitions, regulatory clearances, or changes to corporate structure or listing status.
Sales Drivers and Booker Weakness
By region, UK like-for-like sales rose 3.7% over the 19 weeks, with 3.9% growth in Q3 and 3.2% over Christmas. The Republic of Ireland advanced 4.6% across the period, including 5.0% in Q3 and 3.8% at Christmas, bringing the combined UK and Ireland increase to 3.8%. Central Europe grew 1.0%. Tesco reported a 12-week UK market share of 28.7%, its highest in more than a decade, up 23 basis points year on year.
Fresh food was a key driver, with UK fresh like-for-like sales up 6.6% across the period. Tesco’s Finest range rose 13.0%, including a 22% jump in party-food lines.
Online sales in the UK grew 11.2%, while the rapid-delivery service Whoosh expanded 47%, adding more than 250,000 new customers. Tesco added about 100,000 extra online delivery slots in the week before Christmas using AI-powered scheduling tools.
The retailer launched 340 new or improved own-brand Christmas products, including 180 in the Finest range, and recruited 28,500 additional UK colleagues for the festive season.
Booker’s overall like-for-like sales declined 1.3% across the 19 weeks, falling 0.9% in Q3 and 2.1% over Christmas. Core retail sales dropped 0.4%, including about a 200-basis-point hit from the loss of a lower-margin national account in August. Core catering rose 2.4%, tobacco sales declined 10.9%, and Best Food Logistics increased 0.6%.
Management described Booker’s performance as solid growth in core categories offset by tobacco weakness and the contract exit. Chief Executive Ken Murphy said, “I am delighted with the strong Christmas we delivered for our customers.”
Some analysts had expected Q3 like-for-like growth near 3.9%, and the shortfall, combined with Booker’s weaker contribution, moderated investor reaction despite the raised outlook.
The update links the profit upgrade to execution in fresh food, online growth, and value initiatives. Tesco signaled continued investment in pricing, AI, rapid delivery, and expansion of retail-media and online capacity as priorities to sustain market-share gains.
