Tesco slowed to just 1% group turnover growth in the first quarter amid fierce competition between the supermarkets.
UK like-for-like sales grew just 1.8% to £13.4bn, as the supermarket fought to defend market share gains made in 2025. The group took £16.8bn in revenue overall.
Investments in price, including the roll-out of Aldi Price Match to over 2,000 Express stores, combined with tough prior year comparatives to suppress growth in the the 13 weeks to 30 May.
CEO Ken Murphy said the results were measured against an “exceptional performance” the prior year, but Tesco was “well-placed to build on [its] progress to date”.
Tesco has set itself the goal of winning 30% market share in the UK – a goal now linked to Murphy’s pay packet. It hit a decade high of 29.4% share in the run-up to Christmas.
In a trading update this morning, Murphy said the supermarket “remained focused on giving customers the very best combination of price, quality and service” amid uncertainty for consumers over the Iran war’s impact on their daily lives.
Tesco’s online service outperformed again, with 8.9% sales growth as it exanded its Whoosh instant delivery service into a further 34 stores.
However, wholesale arm Booker has remained a soft spot. Its revenue declined 3.2% to £2.2bn in the quarter, which Tesco blamed on its exit from a “lower-margin contract”.
Tesco stuck by its group operating profit guidance for the year of £3.0-£3.3bn, with free cash flow of £1.5-£2bn.
Bernstein analyst William Woods said Tesco’s softer-than-expected growth could weigh on the company’s share price in the short term.
“But this is a temporary seasonal impact rather than a deterioration in the underlying business performance or competitive position of Tesco within the market,” he added.
RBC analyst Manjari Dhar noted that Tesco’s market share gains have moderated over recent periods.
”We expect this trend to continue given competitors in the UK are starting to stabilise their volume losses,” she said.
“Food inflation, which was coming down from the highs, is likely to see some upward pressure towards the end of the year, given recent higher oil prices. We expect continued investment into the competitive proposition this year.”
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