Following today’s release of Tesco’s figures for the 52 weeks ending 28 February 2026; Eleanor Simpson-Gould, senior retail analyst at GlobalData, a leading intelligence and productivity platform, offers her view: “Tesco’s FY2025/26 performance is positive, but weaker profit growth and margin pressure temper its outlook. Group sales rose 4.6% to £66.6bn, and UK sales rose 4.9% for the 52 weeks to 28 February 2026. While Tesco’s revenue performance is commendable, its profitability has taken a hit, with adjusted operating profit broadly flat at +0.8%. This result looks underwhelming compared to last year’s 10.6% increase, which was boosted by improvements to category mix in Central Europe and strong volumes in the UK & Republic of Ireland (ROI). The grocer’s group margin contracted by 12 basis points and 15 basis points for the UK and ROI. With the Iran conflict front of mind for the grocer and consumers, Chief Executive Ken Murphy has rightly reiterated his commitment to keeping prices down. However, the grocer must be cautious not to overextend investment in price cuts as this risks deepening the already clear squeeze on margins and profitability.
“Tesco’s UK food performance was impressive. Like-for-like sales grew by 5.2%, driven by fresh food, alongside a revamped frozen food offer and around 2,000 product launches through the year. These developments helped its food proposition remain relevant and supported seasonal demand as some traded down from eating out for events such as Valentine’s Day and Mother’s Day. Tesco’s Everyday Low Prices positioning also remains integral to maintaining its value credentials as shoppers remain cautious. The ongoing Middle East conflict is driving up the costs of fuel, utilities and agricultural inputs, leading to higher food inflation and increased reliance on lower-cost alternatives. Tesco’s focus must be on protecting value perception in the essential weekly items. Continuing its Aldi price-matching scheme and implementing personalised Clubcard pricing promotions will be crucial to maintaining volumes without unnecessarily reducing its margin.
“Tesco’s UK non-food result was more mixed but did show signs of improvement. Clothing sales grew 5.1%, accelerating from last year’s 3.0% uplift, with momentum supported by a stronger proposition and the launch of F&F clothing online in May 2025. Home sales fell 0.7% this year, following a 2.2% decline last year. The grocer’s performance remains weighed down by disruption from its transition to a commission model with The Entertainer for toys. Excluding the impact of its toys proposition, home sales rose 1.8%, suggesting Tesco is gaining relevance in this market. Nevertheless, as a mid-market player, Tesco lacks the inspiration and depth of specialists such as Dunelm which achieved a 2.1% growth in sales for the 13 weeks to 28 March 2026.”
