Tesco’s 2025/26 prelims: steady growth, strong cash and another buyback
Tesco has delivered a solid set of preliminary results for the 53 weeks to 28 February 2026, with the comparable 52-week figures showing steady sales growth, resilient profits and robust free cash flow. Market share in the UK hit its highest level in over a decade, and shareholders are getting more cash back via a new £750m buyback on top of a bigger dividend.
There are moving parts here – an extra trading week in the statutory numbers, cost inflation and some regulatory headwinds – but the underlying message is clear: the core food business is performing, cash generation is strong, and Tesco is leaning into technology and productivity to keep prices keen.
Tesco preliminary results 2025/26: the key numbers that matter
| Metric | FY 25/26 | YoY change | Notes |
|---|---|---|---|
| Sales (ex VAT, ex fuel) | £66,588m | +4.6% | 52-week comparable |
| Adjusted operating profit | £3,152m | +0.8% | 52-week comparable |
| Adjusted diluted EPS | 29.0p | +6.0% | Helped by buybacks |
| Free cash flow | £1,957m | +11.8% | 52-week basis |
| Dividend per share | 14.5p | +5.8% | Final 9.7p proposed |
| Net debt (at balance date) | £(10,563)m | £(1,109)m higher | Net debt/EBITDA 2.1x |
| Statutory operating profit | £2,985m | +10.1% | 53-week basis |
Market share highs and online momentum
The most eye-catching strategic win is market share. The UK share rose to 28.5% (+24bps year-on-year) and has climbed +122bps over three years, with December 2025 marking the highest share in more than a decade. Ireland also pushed ahead to 24.2% (+32bps).
Sales growth came with volume wins: Group like-for-like sales rose 3.5% (UK +4.2%, ROI +4.6%, Booker +0.2%, Central Europe +2.2%). Online was a standout – UK online sales grew 11% to over £7bn with online market share up 30bps to 35.7%. Rapid delivery (Tesco Whoosh) surged 51% to over £400m.
Product mix helped too. Tesco Finest grew strongly – up 15% to reach £3bn in sales – while the value proposition was sharpened by tripling Everyday Low Prices to 3,000 lines, over 10,000 Clubcard Prices and more than 600 Aldi Price Match products.
Profit quality and margins: respectable in a competitive market
Adjusted operating profit nudged up 0.6% at constant rates to £3,152m. That is modest, but it arrived alongside heavy investment in price, quality and service, and cost inflation (including higher National Insurance and the new Extended Producer Responsibility levy). Group adjusted margin eased by 12 bps to 4.3%.
- UK & ROI adjusted operating profit: £2,745m, up 0.7%, margin 4.7% (-15 bps).
- Booker: £292m, up 0.7%, margin 3.2% (flat).
- Central Europe: £115m, down (0.9)% at constant rates, margin 2.5% (-10 bps). Excluding last year’s mall disposals, profit grew 8.1% at constant rates.
Statutory operating profit jumped 10.1% to £2,985m, helped by lower impairment charges this year (£53m vs £286m last year) and the extra trading week.
Cash generation, debt and dividends: the engine is humming
Free cash flow of £1,957m rose 11.8%, powered by a £385m working capital inflow and disciplined operations. Capex increased to £1,511m as Tesco leans into distribution automation, store refreshes and digital capability.
Net debt increased to £(10,563)m, primarily because last year’s c.£700m proceeds from the Banking disposal have now been returned to shareholders. Even so, leverage is comfortable at 2.1x Net debt/EBITDA, liquidity stands at £2.9bn with an undrawn £2.5bn RCF, and the pension position improved to a £220m surplus (net of tax). The dividend rises 5.8% to 14.5p.
Shareholder returns: £4.3bn since 2021 and another £750m coming
Tesco completed the £1.45bn buyback announced in April 2025 and has returned £4.3bn via buybacks since October 2021 at an average price of 317p per share. Today, it adds a fresh £750m buyback to be completed by April 2027. That, alongside the 14.5p dividend (roughly a 50% payout of adjusted EPS), signals confidence in sustained cash generation.
Booker and Central Europe: useful context
- Booker: core retail like-for-like +2.2% and core catering +3.8% offset a tobacco decline of (9.5)%. Best Food Logistics grew 0.6%. Operating profit rose 0.7% to £292m despite cost inflation.
- Central Europe: like-for-like +2.2% with fresh food +4.1%. Competitive intensity – particularly in Slovakia – drove an impairment and trimmed constant-currency profit, though operational initiatives are making progress.
Strategy, AI and “Save to Invest”
Tesco’s five refreshed ambitions focus on winning in food, serving more everyday needs, deepening supplier partnerships, personalisation and long-term sustainability. Execution is visible: 93 new stores across the Group, 11% UK online growth, and a big push on Clubcard personalisation – including “Your Clubcard Prices” to 1.5m customers.
Importantly, the Save to Invest programme delivered c.£535m this year and £2.2bn over four years, directly funding lower prices and higher colleague pay. A further £500m saving is targeted in FY 26/27. AI is being threaded through the operation – from supply chain risk tools to a new customer assistant rolling out later this year.
Guidance for 2026/27: a wider range, but still cash generative
Given uncertainty linked to the conflict in the Middle East, Tesco offers a wider outlook range: adjusted operating profit of £3.0bn to £3.3bn and free cash flow of £1.5bn to £2.0bn. Capex is expected to be around £1.6bn, focused on technology, warehouse automation and productivity (think electronic shelf-edge labels). The adjusted effective tax rate is guided to around 27%.
Risks and watch-outs
- Competitive intensity remains high, especially in the UK and Slovakia.
- Regulatory and cost pressures persist, including the EPR levy and higher National Insurance contributions.
- Tobacco headwinds continue to weigh on Booker’s reported sales mix.
- Fuel sales declined (6.5)% year-on-year, which damped reported revenue growth.
My take for retail investors
This is a pragmatic, cash-rich delivery. Sales are growing, customers are happier, and market share is moving the right way. Margins are holding up in the face of price investment – that is hard to do in UK food retail – and the free cash flow is robust enough to fund rising capex, a higher dividend and more buybacks.
On the flip side, profit growth is modest, competition is relentless and the outlook range acknowledges macro uncertainty. Net debt is higher, though leverage is still conservative at 2.1x and the pension has swung to surplus, which helps the balance sheet story.
Overall, it is a net positive update: operational momentum, disciplined capital allocation and another £750m buyback to support EPS. If Tesco keeps squeezing out £500m of annual savings while growing online and personalisation, it should stay well-placed for long-term, low-drama compounding.
