Finance
UK's Tesco Says Uncertainty on Iran War Weighs on Profit Outlook
Published by Global Banking & Finance Review®
Posted on April 16, 2026
2 min readLast updated: April 16, 2026
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Tesco set its fiscal 2026/27 adjusted operating profit forecast at £3.0–£3.3 billion, citing uncertainty from the Middle East conflict, particularly the Iran war, which is driving inflation and supply‑chain cost pressures, especially energy and groceries.
Britain's Tesco says uncertainty on Iran war weighs on profit outlook
Tesco's Profit Outlook and Impact of Middle East Conflict
By James Davey
Economic Uncertainty and Profit Forecast
LONDON, April 16 (Reuters) - Tesco, Britain's biggest food retailer, said uncertainty about the economic impact of the conflict in the Middle East on consumers had clouded its outlook, and in the worse case could result in profit falling this year.
For its 2026/27 year, Tesco forecast adjusted operating profit of between 3.0 billion and 3.3 billion pounds ($4.07-$4.48 billion), versus 3.152 billion pounds made in 2025/26, which was up 0.6% on the year before.
Company Statement on Conflict Duration
"Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly," Tesco said on Thursday.
Analyst Expectations
Prior to Thursday's update, analysts were on average forecasting operating profit of 3.23 billion pounds for 2026/27.
Cost-Saving Initiatives and Consumer Impact
Cost-Saving Targets
Tesco said it is targeting a further 500 million pounds of costs savings this year to help fund investments in its customer offer.
Impact of Fuel Prices and Inflation
Surging fuel prices caused by the Iran war weighed on British consumers last month, dampening household spending as travel plans were shelved, surveys showed on Tuesday.
Grocery Inflation and Food Prices
UK grocery inflation held at 4.3% in the four weeks to March 22, according to data from researcher Worldpanel. However, trade body the Food and Drink Federation has warned food prices will be rising by almost 10% by December.
Food Availability Concerns
Reports have also suggested food availability could be hit by a possible shortage of CO2 gas which is a key input in the food industry.
Sales Performance and Market Share
Tesco's sales, excluding VAT and fuel, in 2025/26 were 66.59 billion pounds, up 4.3%.
Industry data, published last month, showed Tesco has a UK grocery market share of 28.0%, up 30 basis points on the year.
Share Price Performance
Shares in Tesco have increased 37% over the last year but are down 4% over the last month.
($1 = 0.7364 pounds)
(Reporting by James Davey, Editing by Paul Sandle)
Key Takeaways
- •Middle East conflict, notably the Iran war and Strait of Hormuz disruptions, is elevating energy, transport, fertiliser and grocery costs across the UK economy, impacting retailers’ outlooks (en.wikipedia.org).
- •Food inflation risks are rising sharply; industry bodies warn that grocery inflation could exceed 8% by mid‑2026 under a severe energy shock scenario (retailgazette.co.uk).
- •Broader economic risks include downgraded UK GDP growth forecasts (to around 0.8–1.3%), collapsing consumer confidence, and rising household and mortgage cost pressures (moneyweek.com)
References
Frequently Asked Questions about UK's Tesco says uncertainty on Iran war weighs on profit outlook
1How has the Iran war affected Tesco's profit outlook?
Tesco stated that uncertainty from the Iran conflict led them to issue a wider range of forward profit guidance for 2026/27.
2Why is Tesco's profit guidance range wider than previously planned?
Tesco widened its profit guidance range due to uncertainty caused by conflict in the Middle East.
3Who reported and edited the article?
The article was reported by James Davey and edited by Paul Sandle.
