Tesco reaps benefits of price investments but fears impact of Iran war

Although British market leader Tesco has had an outstanding year, the supermarket chain remains very cautious in its outlook, given the increased uncertainty resulting from the conflict in the Middle East.

Highest market share in ten years

Tesco saw revenue rise by 4.6% to £66.6 billion (€76.6 billion) in the recently concluded fiscal year 2025-26, which ended on February 28. Like-for-like revenue growth was 3.5%. The retailer performed well across all regions and businesses: the United Kingdom recorded 4.2% growth, the Republic of Ireland +4.6%, Booker +0.2%, and Central Europe +2.2%.

Adjusted operating profit rose by 0.6% at constant exchange rates to £3.152 billion (€3.6 billion). Market share in the United Kingdom reached 28.5%, an increase of 0.24% year-on-year and the highest level in more than a decade. Online sales in the UK rose by 11% to over £7 billion (€8 billion), with market share increasing by 30 basis points to 35.7%. The fast delivery service Tesco Whoosh grew by 51% to over £400 million (€460 million).

Price cuts and wage increases

The “Save to Invest” cost-saving program has generated more than £2.2 billion for Tesco over the past four years, money the retailer has invested in price cuts and wage increases. The retailer tripled the number of products with everyday low prices to 3,000 and now guarantees an “Aldi Price Match” for more than 600 products. At the same time, sales of the premium private label Tesco Finest grew by 15% to £3 billion (€3.45 billion), reports CEO Ken Murphy. The fashion private label F&F grew by 5.1% to over £1.2 billion (€1.4 billion).

Nevertheless, the CEO remains cautious. Given the increased uncertainty resulting from the conflict in the Middle East, Tesco is providing a broader forecast than previously planned. After all, much will depend on the duration of the conflict and, in particular, on the potential consequences for British households and the broader economy. “At this stage, we expect to achieve adjusted operating profit of between £3.0 billion and £3.3 billion for the 2026/27 fiscal year,” the retailer said. “We will continue to do everything we can to offer our customers the very best prices, quality, and service, and aim to save an additional £500 million this year through our ‘Save to Invest’ program to help fund investments in our customer offering.”