Tesco shares jump as profit surges despite Iran ‘uncertainty’
Tesco shares jumped in early deals this morning after the retailer reported a better-than-expected profit for the year to the end of February.
The supermarket giant made an operating profit of over £3.1bn in the year to February 2026 compared to its own forecasts of between £2.9 and £3.1bn.
The supermarket expects to make an even bigger profit next year, forecasting an operating profit of between £3bn and £3.3bn.
While the grocer warned about the “uncertainty” caused by the war in Iran, Tesco shares reacted positively to the news. The shares jumped 3.2 per cent on Thursday morning, to 487p and have risen by more than 40 per cent in the past year.
Grocers have warned they may have to raise consumer prices to keep up with supply chain and energy cost pressures caused by the war in Iran, but Tesco struck a confident tone.
The grocer said it is providing a wider range to allow for the uncertainty caused by the Middle East conflict.
Tesco: ‘much depends’ on Iran war
The firm said: “Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly.
“We will continue to do whatever we can to deliver the very best prices, quality and service for our customers.”
Tesco delivered better-than-expected like-for-like sales growth, notching 4.2 per cent, above the three per cent forecast by analysts.
Tesco has handed a £65m pay bonus to its employees as the supermarket toasted its biggest market share in over a decade.
The bosses of leading supermarkets met with Chancellor Rachel Reeves earlier this month to discuss the risks posed by the Middle East conflict to food inflation.
The executives of top grocers Marks & Spencer and Asda have called on the government to reduce tax and policy costs to help them avoid raising prices.
Tesco holds a commanding 28 per cent share of the UK grocery market, more than double the combined share of its nearest rivals. Sainsbury’s has a 15.6 per cent and Asda has 11.6 per cent.
The supermarket had enjoyed a so-called “Tescopoly” at the start of this century but the grocer suffered from over expansion after it pursued foreign consumers and other markets like finance and cafes.
Aldi price match gains pace
Tesco has gradually rebuilt its market share in recent decades, using its Clubcard loyalty scheme and Aldi price match programme to foster trust with its customers.
Ken Murphy, who succeeded “drastic” Dave Lewis as chief executive in October 2020, has rapidly expanded this price match scheme, adding around 250 cut-price products per year as the grocer battles to keep pace with German discounters Aldi and Lidl.
Tesco said on Thursday it has tripled the number of products on its “everyday low prices” line in 3,000 over the last year, and now offers more than 600 products price matched to Aldi.
The grocer said it is also investing in its up-market offering, with sales on its Finest line growing 15 per cent to £3bn.
The supermarket has also invested significantly in tech under Murphy’s leadership, more than doubling its headcount in this department while slashing management roles.
Tesco has rolled out its last-minute delivery service Whoosh in recent years and this month announced a partnership with Adobe to expand AI in its mobile app.