Tesco warns of lower profits as supermarket price war heats up

Tesco has warned that its profits will dip in the year ahead, as the UK’s competitive supermarket price war intensifies, alongside rising UK taxes and increased pressure from price-sensitive customers.

For the 52-week period ending 22 February, the grocery giant reported a 10.6% rise in group adjusted operating profit to £3.13bn.

However, the retailer expects adjusted operating profit for 2025/26 to range between £2.7bn and £3.0bn, down from £3.13bn in FY 24/25.

Despite the warning, Tesco’s UK market share rose by 67 basis points year-on-year, reaching 28.3%, its highest level since 2016.

The retailer said on Thursday: “In the last few months, we have seen a further increase in the competitive intensity of the UK market.

“We are committed to ensuring that customers get the best value in the market by shopping at Tesco and we see further opportunities to protect and strengthen our competitiveness.

“We are therefore providing guidance that gives us flexibility and firepower to be able to respond to current market conditions.”

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CEO Ken Murphy added: “Our continued focus on value and quality, coupled with market-leading availability, has contributed to another year of increased customer satisfaction and our highest market share for nearly a decade.

“We have invested in bringing great prices to our customers throughout the year, and continued to innovate with over 1,600 new or improved products including 400 new Finest lines, where overall sales grew 15%.”

“We are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market.

“Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and we see further opportunities to strengthen our competitiveness.”

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