TLDR;
- Tesco stock climbed 2.93% in Thursday morning trade, hitting 396.60p amid a strong trading update.
- The grocer expanded its UK market share to 28%, with fresh food and non-food segments driving growth.
- Online sales rose 11.5%, while its wholesale arm Booker also reported robust gains.
- Despite price war pressures, Tesco maintained full-year profit guidance and continues its £1.45bn share buyback.
TESCO shares traded higher on Thursday, climbing 2.93% to 396.60p by 11:30 AM BST, according to pre-market data on Yahoo Finance.
The rally followed the company’s latest trading update, which showed Britain’s biggest supermarket chain gaining ground in a fiercely competitive grocery sector.
Market Gains Amid Fierce Competition
Tesco’s performance reflects a solid start to the year despite intense pressure from a deepening UK price war. The grocer has steadily expanded its market share, now sitting at 28 percent following 24 consecutive four-week periods of growth. That advance comes amid a broader industry battle for consumer loyalty as inflation-weary shoppers chase value across rival stores.
At the core of Tesco’s progress lies its success in fresh food and non-food offerings. Food sales grew by 5.9 percent year-over-year, while home and clothing categories saw a 6.2 percent rise. The launch of its F&F clothing line in May further strengthened its non-grocery appeal.
Online Growth and Wholesale Momentum
The retailer’s online channel saw a significant push, with digital sales jumping 11.5 percent, helping it gain 163 basis points in market share. This shift underlines the importance of digital convenience in a post-pandemic landscape, where hybrid shopping behaviours have become more entrenched.
Booker, Tesco’s wholesale and catering division, also posted strong results. Core catering sales rose 7.3 percent, aided by good weather and Easter demand, while core retail sales increased by 5.4 percent. These figures suggest resilience across multiple business arms, not just its traditional supermarket operations.
Guidance Holds Steady Despite Price Pressure
Despite the upbeat numbers, Tesco maintained its full-year operating profit forecast at between £2.7 billion and £3 billion. That’s slightly down from the £3.1 billion posted last year, indicating that management is still bracing for tougher months ahead due to prolonged discounting and sector volatility.
Free cash flow is projected between £1.4 billion and £1.8 billion, reaffirming the company’s capacity to reinvest in operations, pay down debt, and return value to shareholders. Investors were also reminded of Tesco’s commitment to capital returns, with £448 million of a planned £1.45 billion share buyback already completed since April.
A Relentless Retail Battlefield
The wider UK grocery market remains under pressure. Rivals like Asda have acknowledged the challenges, with its new chairman referring to a financial “war chest” as the company attempts to reclaim lost ground. Tesco, meanwhile, has responded aggressively, matching prices on over 600 items with Aldi and offering 9,000 Clubcard discounts every week.
Chief Executive Ken Murphy reaffirmed Tesco’s commitment to value and customer satisfaction, noting improvements across multiple metrics in the UK. He credited strong availability, product innovation, and competitive pricing for the continued momentum.
Tesco’s operations in Central Europe also benefited from strong fresh food sales, contributing to a 4.4 percent rise in like-for-like growth in the region.
Despite pressures from a saturated and cutthroat sector, Tesco’s latest performance indicates that it remains a dominant force, using scale, data, and pricing strategy to maintain customer loyalty and shareholder confidence.
