2 October 2025
If you are covering Tesco’s latest results, please see the following comment from Lucy Rumbold, equity research analyst at Quilter Cheviot:
“Tesco posted another beat and raise in its latest results. While its sales slightly lagged expectations, the company more than made up for it through operating efficiency, which flowed through to a beat on the bottom line.
“Tesco’s like for like sales increased by 4.3% for the group, with strength continuing to come from the UK with sales growth at 4.9% and Ireland at 4.8%, driven by volumes and good weather.
“The group also reported a solid operating margin of 5%, due to enhanced efficiency and its ‘save to invest’ programme. This has helped offset operating cost inflation, including a considerable increase to its national insurance costs and the new packaging levy.
“Tesco’s online presence continued to expand, with sales up 11.4% in the UK and a market share increase of more than 100 basis points to 36.9%. Ireland has experienced a similar trend, with online sales up by 18% thanks largely to a boost from the launch of same day delivery.
“The company’s high operating profit, as well as its share buyback programme, supported a higher earnings per share level of 15.43p, which is a 7% increase and brings it in above consensus estimates. Management has raised its guidance at both the bottom and top end, from £2.7-2.9 billion to £3-3.1 billion. This had already been largely assumed by the market given the continued positive Worldpanel data which had shown Tesco’s sales were growing while the Asda threat had not amounted to much in recent months.
“Tesco currently trades at 15.5 times next year’s earnings. Although this is a slight premium to its historic average, the valuation seems reasonable given the company’s stable earnings and defensive characteristics, and it remains well equipped to defend its value proposition and simultaneously maintain its profitability.”
