Published by Global Banking & Finance Review®
Posted on October 2, 2025
3 min readLast updated: January 21, 2026
Add as preferred source on GoogleTesco raises profit outlook, expecting strong Christmas sales. Market share grows to 28.4% amid strategic investments and customer engagement.
By James Davey
LONDON (Reuters) -Tesco, Britain's biggest food retailer, raised its full-year profit forecast on Thursday, saying customers were responding to its investments and it was winning market share, giving it momentum ahead of the festive trading period.
Chief Executive Ken Murphy said that while UK household budgets remained under pressure and consumers were worried about the prospect of tax rises in the upcoming government budget, he expected robust Christmas trading.
"We are actually betting on a good Christmas, we have a lot of confidence in the strength of our offer," he told reporters after the group reported a 4.9% rise in UK like-for-like sales over its first half to August 23.
He called on finance minister Rachel Reeves to deliver a "pro-growth and pro-jobs" budget on November 26.
Shares in Tesco, whose share of Britain's grocery market has grown this year to 28.4%, rose 3%, extending 2025 gains to 20%.
'CONTINUING TO WIN WITH CUSTOMERS'
"We're continuing to win with customers and that has driven our strong performance," said Murphy.
Tesco had said in April it expected profit to fall in its 2025/26 year as it set aside cash to deal with a step-up in the "competitive intensity" of the British grocery market - a reference to a pledge of sustained price cuts from Asda, the number three player, which has been losing market share.
Tesco said on Thursday that competitive intensity remained elevated.
"However, in the first half, a better-than-expected customer response to our actions and the benefit of an extended period of good weather have helped offset the cost of our investments."
Industry data published last month showed Tesco winning more market share than any other UK grocer.
Murphy said those gains "reflect the decisive action we took at the start of the year to further invest in value, quality and service".
Analysts say Tesco's strategy of matching the prices of discounter Aldi on over 600 items, together with heavy promotion of its Clubcard loyalty scheme, which provides lower prices for members, is driving growth.
Tesco is also becoming increasingly digital, stepping up personalised engagement with customers and developing growth avenues such as its online Marketplace platform and retail media.
Tesco said it now expected full-year 2025/26 adjusted operating profit of between 2.9 billion pounds and 3.1 billion pounds ($3.9-$4.2 billion), up from previous guidance of between 2.7 billion pounds and 3 billion pounds and versus 3.13 billion pounds made in 2024/25.
First-half adjusted operating profit rose 1.5% to 1.67 billion pounds.
"We still think that the H2 profit guidance is conservative, implying more margin pressure in H2 year-on-year than in H1," analysts at Bernstein said in a note.
(Reporting by James Davey; Editing by Kate Holton and Sarah Young)
Customer engagement refers to the interactions and relationships a company builds with its customers. Effective engagement can lead to increased loyalty, higher sales, and improved customer satisfaction.
Market share is the percentage of an industry's sales that a particular company controls. It is an important indicator of a company's competitiveness and market position.
The grocery sector encompasses businesses that sell food and other household products. It includes supermarkets, grocery stores, and online grocery services.
A loyalty scheme is a marketing strategy used by businesses to encourage repeat purchases by offering rewards, discounts, or points to customers based on their spending.
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