Note Tesco TSCO Fiscal year ended in February 2025, with revenues of 3.5% and total revenue of £69.9 billion, in line with the company’s compiled consensus. Tesco has increased its market share by 60 basis points, leading the UK grocery market by 28% according to Kantal, while Ireland’s market share was 24%, earning about 30 basis points.
Despite market share profits, Tesco has released operating profit guidance for the following fiscal year, as it is lower than the year that ended amid rising pricing wars across local grocery stores. This caused the stock to fall by nearly 7% at the market opening on April 10th. This market response is considered to be overly pessimistic given Tesco’s solid performance and recent profits from market share. They maintain a fair value estimate of 316p and consider the stock to be a substantial valuation.
Tesco UK sales grow
Sales like the UK rose 4% in the reported year, but fell 0.2% in convenience channels due to 4% sales in large stores and 10% growth in online channels. Tesco continues to invest in digital capabilities. However, despite the growth in online sales, the channel still represents a low share of overall UK sales.
Ireland’s sales increased by 5.6%. This includes 1% since new stores opened. Booker reported a 2% decline in sales due to the continued decline in the fast food and tobacco market. Central Europe has seen sales growth, primarily volume-driven 2.2%. All regions achieved increased operating margins and contributed to an increase in 33 base points for the group’s margin of 4.5%.
Next year’s management fell from £3.1 billion this year, led by operating profits ranging from £2.7 billion to £3 billion. The outlook reflects competition, including the UK’s third largest grocery store ASDA, which includes a wide range of price cuts announcements.
Tesco announced a full-year dividend of 13.7p, an increase of 13% from the previous year, in line with a 50% payment target. A stock repurchase of £1.45 billion is expected in fiscal 2026.
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