Britain’s largest supermarket chain Tesco has strengthened its full year earnings outlook after delivering a resilient performance during the crucial Christmas trading window, underlining its ability to win customers in a challenging consumer environment.
The retailer said it now expects adjusted operating profit to land at the upper end of its previously stated guidance of £2.9 billion to £3.1 billion for the current financial year. The company had reported adjusted operating profit of £3.13 billion in 2024–25. The revised outlook follows a 3.2 percent increase in underlying UK sales over the six week festive period ending January 3, reflecting steady demand despite persistent inflation and pressure on household spending.
Tesco continues to outperform the broader UK retail market, benefiting from a sharp focus on value at a time when consumer confidence remains fragile and employment growth has softened. Industry data shows the grocer closed 2025 with a UK grocery market share of 28.7 percent, up 20 basis points year on year and its highest level since March 2015. Like for like UK sales rose 3.9 percent in the third quarter to November 22, easing from 4.6 percent growth in the previous quarter.
While the Christmas performance came in slightly below analyst expectations, investors have remained optimistic. Tesco shares have risen 22 percent over the past year, reflecting confidence in the group’s long term strategy under chief executive Ken Murphy.
Since taking the helm in 2020, Murphy has steered the business toward improving product quality, accelerating innovation and strengthening customer service. These efforts have been complemented by aggressive pricing measures, including matching Aldi prices on more than 650 everyday items and expanding Clubcard exclusive discounts.
More recently, Tesco announced it would freeze prices on over 3,000 branded products, spanning staples such as breakfast cereals, baked beans and tea. According to Murphy, investments in value, quality and service have lifted customer satisfaction and driven strong growth in fresh food, helping Tesco consolidate its leadership position in an increasingly competitive grocery market.
