Food retailer Tesco forecast full-year profit at the upper end of previous guidance as it reported a rise in underlying sales for the key Christmas trading period.
The company said sales at its Republic of Ireland stores rose 3.8 per cent over the festive period, with combined UK and Ireland trading up 3.3 per cent. Christmas sales cover the six-week period to January 3rd.
Growth was attributed to an increase in food sales of 5.2 per cent year on year, with particularly strong growth in fresh food, while the company also opened five new stores in the period and extended its Whoosh rapid delivery service to 18 new locations in Dublin, Cork and Galway.
The group also saw market share gains of 41bps to 24 per cent, marking a fourth consecutive year of market share gains over the period.
In the third quarter of the year, Irish sales rose 5 per cent, outstripping growth in Tesco’s other markets. The company said sales at its UK stores rose 3.9 per cent in the 13 weeks to November 22nd 2025, while overall growth was 3.1 per cent.
The group said it now expected adjusted operating profit, its preferred profit measure, at the upper end of the £2.9 billion to £3.1 billion (€3.3 billion to €3.5 billion) range it forecast in October. It made £3.13 billion in 2024/25.
Tesco’s update showed it had continued to outperform the wider UK retail market with a focus on value at a time of subdued consumer confidence, still high inflation and weakening employment.
Under Ken Murphy, chief executive since 2020, the group is also benefiting from a strategy to improve the quality of its products, increase innovation and enhance customer service.
Meanwhile shares of Penneys and Primark owner Associated British Foods plunged as much as 12 per cent after it issued a profit warning amid weak sales at the affordable fashion chain. Weakness was especially pronounced in continental Europe, where consumer confidence is low and measures to revamp the brand are only just underway.
“Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe,” chief executive George Weston said.
Marks & Spencer fared somewhat better. Although its sales missed expectations for both the clothing and food divisions, the retailer kept full-year guidance unchanged and said it’s accelerating its turnaround plan. The stock, which fell 12 per cent in 2025, gained as much as 3.7 per cent on Thursday in London.
The mixed trading updates are the first indication that the holiday season — a vital period for retailers — was challenging for brands that already spent the best part of 2025 grappling with higher costs. Negative commentary from the British government on the bleak stake of public finances as well as tax rises have dented consumer confidence. -- Additional reporting: Reuters/Bloomberg
