Tesco has raised its profit guidance after reporting stronger-than-expected Christmas trading, driven by market share gains and higher sales across fresh food, online and clothing.
The supermarket said it now expects group adjusted operating profit for the 2025/26 financial year to come in at the upper end of its previous £2.9bn to £3.1bn guidance range, following a strong festive performance.
UK sales growth was led by fresh food, with like-for-like sales up 6.6% over the Christmas period, reflecting continued investment in pricing and product quality.
It outperformed the wider market on both value and volume, extending a run of year-on-year market share gains.
Tesco also highlighted improved customer satisfaction, with its net promoter score increasing year on year ahead of the market.
Sales of its Finest range rose 13%, supported by growth of more than 20% in party food, while home and clothing sales increased 2.1%, including clothing growth of 4.4% over Christmas.
Online sales grew 11.2% during the period, supported by extended Christmas Eve deliveries, while rapid delivery service Whoosh recorded sales growth of 47%.
The group said it had strengthened its price position compared with rivals over the year, pointing to festive promotions including a Christmas dinner for six priced under £10 and discounts on seasonal products.
Outside the UK, Tesco reported sales growth across all channels in Central Europe, driven by fresh food, online and the expansion of its Finest range.
Online like-for-like sales in the region rose 14.3%, while Finest sales increased 28% following the launch of new own-brand Christmas products.
In Ireland, Tesco recorded market share gains for a fourth consecutive year, with food sales up 5.2% year on year.
Its fresh food performance underpinned the increase, alongside recognition for product quality through multiple industry awards.
At Booker, Tesco’s wholesale arm, core catering sales rose 2.4%, while its Logistics subsidiary Best Food Logistics reported sales growth of 0.6% amid continued weakness in parts of the fast-food sector.
Looking ahead, Tesco said it continues to expect free cash flow for 2025/26 to fall within its medium-term guidance range of £1.4bn to £1.8bn.
The group noted that the financial year will include 53 weeks, but that all guidance is provided on a comparable 52-week basis.
Ken Murphy, chief executive, said: “I am delighted with the strong Christmas we delivered for our customers. Our investments in value, quality and service drove further gains in customer satisfaction and strong growth in fresh food, contributing to our highest UK market share in over a decade.
“In addition to further strengthening our price position, we launched 340 new and improved own-brand Christmas products including 180 in Finest, which once again delivered double-digit sales growth. We also recruited 28,500 additional colleagues for the festive period and offered an extra 100,000 online delivery slots in the week before Christmas, enabled by AI-powered scheduling tools developed by our technology and logistics teams.”
He added: “Online sales grew double-digit and Whoosh also performed strongly, with more than 250,000 new customers over the period.
“Competition is as intense as ever and we know value remains a priority for customers. We are determined to help customers make their money go further, and earlier this week expanded our Everyday Low Prices commitment to over 3,000 branded products, sitting alongside Aldi Price Match on more than 650 lines and thousands of exclusive offers through Clubcard Prices.”
