Tesco's Sales Growth Continues
Tesco Reports 1% Sales Rise to £16.8 Billion in Strong First Quarter
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Key Points
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Tesco said Ireland’s like-for-like sales rose 3.3% to £838m over the 13 weeks to May 30, with food sales up 3.7% supported by volume growth across both Fresh and Packaged goods.
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Tesco disclosed UK like-for-like sales of +1.8% (13 weeks to May 30), which it noted was below analysts’ average forecast of +2.3% and compared with +3.1% in the prior quarter—when growth had been boosted by favourable weather.
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On customer satisfaction, Tesco reported that UK net promoter scores rose by six points, alongside improvements in customer satisfaction more broadly.
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Tesco reaffirmed free-cash-flow guidance of £1.5bn to £2.0bn and said nearly half of its £750m share buyback had already been executed.
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Tesco linked weaker Booker trading to the business “after exiting a lower-margin contract,” rather than framing the decline purely as demand weakness.
Tesco posted group sales of £16.8 billion for the 13 weeks to May 30, up 1% year-on-year, but its shares fell nearly 3% after UK growth came in below expectations. Yahoo Finance reported that UK like-for-like sales rose just 1.8%, missing the analyst consensus of 2.3% and slowing from 3.1% in the prior quarter.
CEO Ken Murphy urged investors not to "read too much" into the slowdown, blaming tough weather comparatives from last year. He added: "With the conflict in the Middle East creating ongoing uncertainty for many households, we remain focused on giving customers the very best combination of price, quality and service."
UK Sales Miss Drags Shares Down Nearly 3%
Tesco shares (TSCO.L) fell 2.9% to 443.30p on June 18. The trigger was the UK like-for-like sales figure of 1.8% — short of the 2.3% consensus forecast. CoinCentral noted the miss was compounded by weaker-than-expected results at Booker, Tesco's wholesale arm, where like-for-like sales dropped 3.2%.
Bernstein analyst William Woods called the UK shortfall a "temporary seasonal impact rather than a deterioration in the underlying business." Analysts at Citi and TipRanks kept Buy ratings, pointing to Tesco's strong cash generation. Murphy argued last year's quarter was boosted by "outstanding" weather that made this year's comparison unusually tough.
Ireland Beats, Booker Drags — A Tale of Two Divisions
Ireland was the standout performer. Like-for-like sales there rose 3.3% to £838 million, beating the 3.1% forecast. Food sales in Ireland climbed 3.7%, driven by volume growth in both fresh and packaged goods, according to UK Finance Yahoo.
Booker's 3.2% like-for-like sales decline looks worse than it is. Tesco said the fall came after the business exited a "lower-margin national account" in August 2025 — a deliberate move to protect profitability, not a sign of falling demand. Central Europe also quietly beat forecasts, with like-for-like growth of 0.8% against a 0.6% expectation.
Online Growth and Clubcard Deals Underpin Customer Wins
Online sales grew 8.9% in the quarter. Tesco's "Whoosh" rapid delivery service was a key driver. Marketing Week reported that Tesco's UK Net Promoter Score — a measure of customer loyalty — rose six points to +31. That is a record high for the retailer and up quarter-on-quarter as well.
Tesco linked the satisfaction gains to its "Aldi Price Match" and targeted Clubcard Prices offers. RBC analyst Manjari Dhar warned, however, that Tesco's market share gains are starting to "moderate" as rivals ramp up their own value campaigns. The competition for budget-conscious shoppers is intensifying.
Guidance Held Firm as Buyback Nears Halfway Mark
Tesco kept its full-year adjusted operating profit guidance at £3.0 billion to £3.3 billion. Free cash flow guidance was also reaffirmed at £1.5 billion to £2.0 billion. Of the £750 million share buyback, £341 million — roughly 45% — has already been completed, according to UK Finance Yahoo.
The backdrop remains tricky. UK inflation held at 2.8% in May, but petrol prices are up 25% year-on-year due to disruption in the Strait of Hormuz. The British Retail Consortium has warned that every cost "government chooses not to address" will end up in shoppers' baskets. Tesco's half-year results are due on October 8, 2026.
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