TLDRs;
- Tesco shares rose 1.7% after hitting highest UK market share since 2015.
- UK grocery sales rose 3.8%, supporting Tesco’s Christmas season momentum.
- Tesco’s share buyback programme strengthens earnings per share and investor confidence.
- January 8 update will reveal if market-share gains translate into profit.
London, January 6, 2026 , Tesco PLC (TSCO.L) shares climbed 1.7% in early London trading on Tuesday following strong Christmas grocery sales and market share growth, signaling investor optimism ahead of the company’s upcoming January 8 trading update.
The supermarket giant recorded its highest UK market share since March 2015, according to recent industry data, offering an early glimpse into a festive period that is critical for its profit margins.
Tesco Tops Market Share Since 2015
Data from Worldpanel by Numerator revealed that UK grocery sales rose 3.8% to £13.8 billion in the four weeks ending December 28. Tesco’s share of the market increased by 0.2 percentage points to 28.7%, outperforming peers like J Sainsbury, which rose 1.6%, and online grocer Ocado, which surged 8.5%.
Analysts view these figures as a positive sign that Tesco is successfully leveraging promotional campaigns and operational strategies to attract shoppers during the high-demand Christmas period.
Easing Inflation Provides Mixed Signals
While grocery inflation moderated to 4.3% from 4.7%, the impact on Tesco’s profitability is complex. Slower price rises ease consumer pressure and can drive higher volumes, but they also limit the revenue growth supermarkets can achieve simply by charging more.
Investors will be closely watching how Tesco balances competitive pricing with sustainable margins in its upcoming trading statement.
Share Buybacks Bolster Investor Confidence
Adding to the positive momentum, Tesco announced it repurchased 454,043 shares on January 5 under its £1.45 billion buyback programme, paying an average of 440.49 pence per share. Since the programme began in April 2025, the company has spent £1.43 billion to repurchase over 347 million shares.
By reducing the number of outstanding shares, Tesco aims to lift earnings per share (EPS) even if overall profit growth remains steady, a strategy that has historically been welcomed by the market.
Investors Eye January 8 Update
Analysts consider the January 8 trading update a key directional catalyst for Tesco stock.
“The market is focused on whether these market-share gains are translating into operating profit, not just higher promotional activity,” said Axel Rudolph, senior market analyst at IG.
Tesco will need to demonstrate that its volumes remained resilient during peak weeks without excessively eroding margins, particularly as food inflation and wage costs continue to pose challenges in 2026.
Despite the positive market signals, risks remain. Shoppers remain price-sensitive, and any renewed surge in food inflation could pressure margins. Investors will be monitoring guidance closely to assess whether Tesco can maintain its competitive edge and defend its market share without sacrificing profitability.
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