Following today’s release of Tesco’s figures for the 52 weeks ending 22nd February 2025; Eleanor Simpson-Gould, senior retail analyst at GlobalData, a leading data and analytics company, offers her view: “Tesco’s latest financial results reflect a commendable performance in another year of intense discounter activity. Group sales at actual rates increased by 3.5%, driven by a strong 5.1% growth in the UK for the year ending 22 February 2025. The grocers’ adjusted operating profit rose 10.6% to £3.1bn, bolstered by cost-saving measures. Despite this commendable performance, Tesco has warned of lower profit expectations between £2.8bn and £3.0bn in the new financial year, as the grocer readies for intensifying competition in the UK market and a cost of £235m to offset National Insurance contributions. Though this will be another challenging year as UK grocers battle to protect profits and margins, we expect Tesco’s performance in FY2024/25 will have secured a 0.5ppt increase to its lead in UK food & grocery market share. Tesco must prioritise boosting volumes through personalised Clubcard offers and accelerating its premium range innovation.
“In its core UK market, Tesco’s food division excelled with a 4.9% like-for-like growth. This solid performance reinforces Tesco’s position as the UK’s leading grocer. As the focus in the sector shifts from price competition with discounters to premium offers, Tesco has kept momentum on product innovation, with its Finest range up 15.0% in the UK. During the financial year, the grocer launched 1,000 new products, including 400 Finest range items and improved 600 existing items, focusing on popular protein and gut health ingredient trends and growing its dine-in ranges. Despite food inflation projected to reach 4.5% in June 2025, we anticipate fewer consumers will trade down to discount retailers compared to 2023. To bolster margins, Tesco must continue developing its Finest range to compete effectively with Marks & Spencer, especially during seasonal events like Easter.
“In February 2025, Tesco rightly diminished its Aldi price match scheme; this will be integral to retaining demand in 2025 as quality was a more significant driver for the sector than price as a driver of food purchases for UK shoppers in 2024*, and we expect this driver to continue to grow in 2025. Tesco must harness its impressive Clubcard penetration of 23 million UK households to ensure that shoppers who feel the pinch as inflation rises utilise the cost-saving benefits from its loyalty scheme. Against weak comparative non-food sales, Tesco has enhanced its F&F clothing range by concentrating on activewear and on-trend pieces. This focus secured an impressive 3.0% like-for-like growth in its clothing division. This feat is commendable against a challenging clothing & footwear market that declined 4.2% in 2024. With the grocers’ online sales growing at a robust 10.2%, Tesco must expedite the launch of its F&F clothing range to its Marketplace platform, as online clothing & footwear sales are forecast to outpace offline in 2025.”
*GlobalData’s 2024 How Britain Shops Survey of 9,000 UK respondents.
