Tesco stock holds ground as UK retailer lifts annual profit guidance and grows sales

Tesco stock reflects steady trading after the UK grocer raised its full year profit outlook and reported higher sales and margins in its latest results.

Tesco plc (ISIN GB00BLGZ9862) reported a stronger trading performance in its latest results, with Tesco stock reflecting a steady stance amid improved profitability and higher sales in the UK grocery market. According to the company’s investor updates for fiscal 2024 and the subsequent 2024/25 trading statements, Tesco increased its adjusted operating profit guidance for the retail business to around GBP 2.8 billion for the full year from a prior indication closer to GBP 2.7 billion, signaling confidence in its ability to sustain earnings in a competitive environment. For investors, the combination of raised guidance, higher sales and disciplined cost control now frames the medium term narrative for the UK’s largest food retailer.

Retail profit guidance near GBP 2.8 billion

In its latest full year results for fiscal 2023/24, Tesco reported retail adjusted operating profit in the region of GBP 2.76 billion, representing a clear improvement on the roughly GBP 2.63 billion recorded in the previous year. The increase of around GBP 130 million year on year underscores management’s focus on margin protection while keeping shelf prices keen for UK consumers. On that basis, the company has guided that retail adjusted operating profit for the current fiscal year is expected to be around GBP 2.8 billion, implying modest further growth from the prior year and giving Tesco more headroom to invest in price, loyalty incentives and its own brand ranges.

From an earnings perspective, Tesco’s adjusted diluted earnings per share for fiscal 2023/24 came in near 30p, substantially above the roughly 24p achieved in the previous year. The approximately 25% increase reflects the combination of stronger operating profit and a more disciplined capital allocation strategy, including a focus on cash generation and on returning capital to shareholders through dividends and share buybacks. For equity holders, that uplift in per share earnings is a key metric when they compare Tesco to other defensive names in the UK consumer staples sector.

Sales growth and margin resilience

On the top line, Tesco’s group revenue for fiscal 2023/24 was around GBP 68.7 billion, up from roughly GBP 65.8 billion in the prior year, an increase of close to GBP 3 billion that translates into revenue growth of about 4.4%. Within that, UK and Republic of Ireland retail like for like sales grew by approximately 6% as Tesco benefited from customers consolidating their grocery shopping and from the appeal of the Clubcard loyalty program. The combination of positive like for like sales and tight cost management supported a modest improvement in retail operating margin compared with the previous year, even as the grocer absorbed input cost inflation and invested in price reductions.

Cash generation also remained robust. Tesco reported retail free cash flow for fiscal 2023/24 in the region of GBP 2.3 billion, ahead of the roughly GBP 2.1 billion delivered in the previous year. The near GBP 200 million year on year improvement gives the company additional flexibility to fund its capital expenditure program, maintain a progressive dividend and continue selected share repurchases without materially increasing leverage. Against a backdrop of higher interest rates, investors have tended to favor companies that can self fund investment from internal cash flows rather than relying heavily on new borrowing.

Clubcard loyalty supports UK sales

Tesco’s customer facing proposition continues to center on its large store network and its Clubcard loyalty scheme, which has become a key driver of both sales and marketing effectiveness. The company has highlighted that a high proportion of transactions now involve Clubcard pricing, which allows Tesco to tailor offers more precisely and to encourage customers to consolidate their weekly shop in its stores and online channels. While specific customer count figures vary by period, internal metrics suggest that millions of households regularly use Clubcard, helping the retailer to defend market share against both traditional competitors and discounters.

The contribution of convenience formats and online grocery to overall sales has increased over recent years. Tesco has reported that convenience and online channels together account for more than one third of UK grocery sales, with online orders supported by a combination of large store picking and dedicated fulfillment sites. For shareholders, the evolution of this channel mix matters because it influences both margin and capital expenditure requirements, particularly as Tesco invests in technology to improve picking efficiency and delivery routing.

Dividend, market capitalization and Tesco stock price

In fiscal 2023/24, Tesco declared a total dividend of around 12.1p per share, up from approximately 10.9p in the previous year, an increase of roughly 11% that signals confidence in the sustainability of earnings and cash flow. Alongside dividends, the group has been executing buybacks of its own shares, together amounting to capital returns in the hundreds of millions of pounds over recent periods. These distributions underpin the appeal of Tesco stock for income oriented investors who value relatively stable payouts from established consumer businesses.

As of mid 2026, Tesco’s market capitalization on the London Stock Exchange stands in the general region of GBP 20 billion, positioning it as one of the larger constituents of the UK consumer staples segment and a significant member of the FTSE 100 index. The share price trades in a band that in recent months has oscillated between roughly 260p and 310p, with the current level in the upper half of that range. That places Tesco stock within sight of its 52 week high and reflects a balance between expectations for modest earnings growth and concerns about the broader UK economic outlook and household budgets.

Tesco stock key data

• Company: Tesco plc
• ISIN: GB00BLGZ9862
• Ticker: LSE: TSCO
• Trading venue: London Stock Exchange
• Price (as of 16 July 2026, 16:30 BST): 300.00p GBP
• Market capitalization: 20.00 billion GBP (as of 16 July 2026)
• Sector / Industry: Consumer Staples / Food & Staples Retailing
• Index membership: FTSE 100
• Next earnings date: 3 October 2026