Tesco Plc said first-quarter like-for-like sales growth slowed materially compared with the same period a year earlier, as the company highlighted a tougher prior-year comparison and uncertainty stemming from the conflict in the Middle East. Despite that deceleration, the group lifted its annual profit and cash-flow guidance.
For the 13 weeks to May 30, Tesco reported group sales up 1.8% on a like-for-like basis to 3.83 billion. The UK, Tesco largest market, matched the group pace with like-for-like sales up 1.8%. Within the UK, food sales rose 2.6% while fresh food increased 3.6%. Tesco also noted an improvement in its UK customer satisfaction score, which climbed 6 points year-on-year to 31.
Outside the UK, results were mixed. Sales in the Republic of Ireland rose 3.3% on a like-for-like basis, down from growth of 7.2% at constant rates a year earlier. Central Europe posted like-for-like sales growth of 0.8%. Online sales continued to expand, rising 17.4% in the quarter.
The company flagged pressure at its wholesale division, Booker, which recorded a 3.2% like-for-like sales decline, reversing growth of 2% a year earlier. Tesco attributed the reversal in part to the exit of a lower-margin contract. Within Booker, core retail sales fell 1.5% compared with growth of 5.4% in the prior-year period, while core catering sales declined 3.3% versus growth of 7.3% a year earlier.
Against that operating backdrop, Tesco issued a stronger annual profit target for 2026-27. The group now expects adjusted operating profit of 3.00 billion to 3.30 billion, up from the prior-year range of 2.70 billion to 3.00 billion. It also increased its free cash flow forecast to 1.50 billion to 2.00 billion, compared with a previous range of 1.40 billion to 1.80 billion.
Analyst expectations compiled by Tesco from forecasts by Visible Alpha, published April 29, had a consensus 2026-27 adjusted operating profit estimate of 3.25 billion, which falls within the newly guided range. Those eight analyst estimates ranged between 3.16 billion and 3.29 billion. Consensus for group revenue, excluding VAT and including fuel, stood at 74.86 billion, with adjusted diluted earnings per share forecast at 30.8 pence.
Tesco has also been returning capital to shareholders. Since launching a 750 million buyback programme on April 16, the group has repurchased 341 million of its own shares.
The company explicitly linked the first-quarter slowdown to a strong comparison from the prior year and uncertainty related to the conflict in the Middle East. It did not introduce additional quantitative detail on how that uncertainty might affect future trading beyond updating its guidance ranges for profit and cash flow.
Summary of the quarter: Tesco saw modest like-for-like growth overall, stronger online performance, regionally mixed results, and a notable weakening at wholesale arm Booker attributable in part to the exit of a lower-margin contract. Management raised both adjusted operating profit and free cash flow guidance for 2026-27 and continued a share buyback programme.