Tesco backs full-year guidance but UK LFL sales growth misses forecast

Tesco PLC on Thursday said it was ‘pleased’ with progress in the first quarter, reporting a modest sales increase, although UK sales growth fell short of market expectations.

The Welwyn Garden City-based supermarket chain, the UK’s largest grocer, reported sales of £16.83 billion in the 13 weeks ended May 20, with like-for-like growth of 1.0%, supported by growth in the UK stores and strong online demand.

Like-for-like sales in the UK grew 1.8%, below Visible Alpha consensus of 2.3%, while LFL sales in the Republic of Ireland increased 3.3%, above 3.1% VA consensus. Central Europe LFL sales growth of 0.8% beat 0.6% VA consensus.

LFL sales at the Booker wholesaling arm fell 3.2%, worse than VA consensus which forecast a lesser decline of 2.4%.

In response, shares in Tesco were down 2.9% to 443.30 pence each in London on Thursday, while the broader FTSE 100 index was down 0.6%.

In the UK, food sales rose 2.6% in the quarter compared to last year, with fresh food sales up 3.6% and premium-brand Finest sales climbing 9%. Tesco saw ‘strong’ online growth, with sales up 8.9%.

The Republic Of Ireland saw growth across all channels, Tesco said, supported by strong performance in food, where sales rose 3.7%.

The fall in sales at Booker reflected the ending of a lower-margin national account last August and the prior year benefiting from favourable weather.

Chief Executive Ken Murphy said he was ‘pleased’ with progress in the quarter, with continued sales growth building on the ‘exceptional’ performance delivered last year.

While the conflict in the Middle East is creating ‘ongoing uncertainty’ for many households, Murphy said Tesco Media is ‘growing strongly’, with the World Cup providing ‘exciting opportunities’.

Despite the uncertainty, Tesco continues to expect group adjusted operating profit of £3.0 billion and £3.3 billion for the current financial year, and free cash flow within its medium-term guidance range of £1.5 billion to £2.0 billion.

For financial 2026 the grocer had reported adjusted operating profit of £3.15 billion and free cash flow of £1.96 billion.

Tesco has repurchased £341 million in shares under its £750 million buyback programme, which it expects to complete by April 2027.

Tesco will publish its half-year results on October 8.

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