8 October 2026
If you are covering Tesco's latest financial results, please find below a comment from Lucy Rumbold, equity research analyst at Quilter Cheviot:
"Tesco reported a mixed picture with its first half year results this morning, with like for like sales growth of 1.3%, below consensus expectations of 1.8%. However, this has been offset by the profit beat as well as guidance and buyback uplift with the shares opening positive up 3%. Management reiterated its focus on strengthening the value proposition to drive further market share gains, and are continuing to invest heavily in price which is contributing to the softer-than-expected like for like performance.
"The premium Finest range remained a standout performer, delivering 9% sales growth. This should be a positive read across for M&S given its premium offering, as the continued K shaped consumer spending supports demand for higher-quality grocery offerings.
"Operating profit exceeded expectations by 4%, rising 6.3% year-on-year, supported by cost savings, an improved sales mix driven by stronger premium penetration, and growing contributions from newer income streams such as retail media and Whoosh. Online sales meanwhile increased 8% during the half, while rapid delivery service Whoosh grew 37%.
"Management raised the lower end of full year profit guidance, now expecting retail adjusted operating profit of £3.15bn-£3.30bn. The share buyback programme was also increased to £950m from £750m, implying a c.3.2% buyback yield.
"Overall, this as a strong set of results given the challenging operating environment. UK grocers continue to invest in price to protect competitiveness, limiting their ability to fully pass through inflation. Despite this, Tesco continues to demonstrate robust operating leverage and cash generation, highlighting the strength of its underlying business model. While Tesco has a market-leading position and proven ability to sustain profitability through difficult trading environments, we see greater upside potential in M&S. The strong performance of Finest reinforces the view that premium grocery demand remains resilient, and M&S is better positioned to benefit from this trend, with pricing more closely linked to product quality, innovation and brand strength than competitive necessity."
