UK supermarket Tesco reveals better than expected results for 2024/25 but predicts operating profit will be down in 2025/26 due to increased “competitive intensity” in the market.

For the year 2024/25, Tesco has reported group adjusted operating profit is £3,128 million, up 10.9% at constant rates, with group sales (excluding VAT and excluding fuel) up 4% at constant rates to £63,636 million.

Market share

The UK’s biggest supermarket also saw increased market share, +67bps year-on-year to 28.3%, and increased brand perception, +185bps year-on-year. Clubcard sales penetration was up by 84% in the UK and group-wide Tesco app users increased 12% year-on-year to 18 million.

“We have invested in bringing great prices to our customers throughout the year.”

Tesco chief executive Ken Murphy stated: “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 also making significant progress on our long-term growth opportunities, further enhancing our digital capabilities with increased personalisation, further improvements to our online experience and an expanded retail media offering.

“Building on our strong financial performance, robust balance sheet and positive momentum, 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 see further opportunities to strengthen our competitiveness.”

Outlook

In a statement, the supermarket said that investments over the last four years have resulted in its most competitive position and highest market share for many years, leading to a “strong financial position and positive trading momentum”, stating that it had delivered well against the multi-year performance framework that it set out in 2021.

However, in the last few months, Tesco commented, it has seen a “further increase in the competitive intensity of the UK market” and that it is “committed to ensuring that customers get the best value in the market”, noting, “we see further opportunities to protect and strengthen our competitiveness”.

Looking forward to this year, Tesco is “providing guidance that gives us flexibility and firepower to be able to respond to current market conditions” and expects a lower Group adjusted operating profit for 2025/26 of between £2.7 billion and £3 billion.