Tesco interim results preview: can strong market-share gains offset rising costs? 

Tesco interim results preview: can strong market-share gains offset rising costs?

Tesco is due to publish its interim results for the six months to the end of August on Thursday 8 October 2026, with investors looking for evidence that the UK's largest supermarket can maintain its recent market-share momentum while continuing to absorb higher operating costs and investment in value.

Tesco made a relatively cautious start to its 2026/27 financial year. In its first-quarter trading statement in June, group like-for-like sales increased by 1.0%, including growth of 1.8% in the UK, 3.3% in Ireland and 0.8% in Central Europe. Booker was the weak spot, with like-for-like sales down 3.2%.

The headline UK figure looks modest compared with Tesco's strong performance over the previous year, but the comparison was unusually tough. UK like-for-like sales were being measured against an exceptionally strong first quarter in 2025/26, which benefited from record-breaking weather and disruption at competitors. On a two-year basis, UK like-for-like sales were up 6.9%.

That makes the October results an important test of whether Tesco's underlying growth remains intact.

Those looking to invest in Tesco can do so through IG Invest or our share dealing service, while traders can access the share price via spread betting or CFD trading.

UK market share remains central

One of the most important indicators will be Tesco's UK market share.

The supermarket has spent several years investing in price, quality and availability, with its strategy increasingly focused on defending its position against the likes of Aldi and Lidl while also competing aggressively with Sainsbury's, Asda and Morrisons.

In the first quarter, Tesco reported a six-point year-on-year improvement in its net promoter score to 31, while UK food sales rose 2.6%. Fresh food was particularly strong, increasing 3.6%, while Finest sales rose 9%. Online sales climbed 8.9%.

The previous financial year demonstrated the scale of the progress Tesco has made. For FY2025/26, UK market share reached 28.5%, while group sales excluding VAT and fuel rose 4.3% on a comparable 52-week basis. Adjusted operating profit increased 0.6% at constant exchange rates to £3.152bn.

Tesco also said it had gained more than 120 basis points of UK market share over three years, with its December 2025 share reaching its highest level in more than a decade.

The October figures will therefore show whether that momentum is continuing despite a more challenging consumer environment.

Profit growth versus investment

The key financial question is likely to be whether Tesco can translate sales growth into stronger operating profit while continuing to invest heavily in its customer proposition.

For 2026/27, Tesco is guiding to group adjusted operating profit of between £3.0bn and £3.3bn. It is also targeting free cash flow within its medium-term range of £1.5bn to £2.0bn.

That guidance implies a potentially meaningful improvement from the £3.152bn adjusted operating profit generated in FY2025/26, although the range is deliberately wide.

The cost environment will be particularly important. Tesco has been using its "Save to Invest" programme to offset wage, regulatory and other cost inflation while freeing up money to reinvest in prices, quality and service.

The company delivered around £535m of savings through the programme in FY2025/26 and said it was continuing to use productivity improvements to fund investment in the customer offer.

Investors will therefore be looking closely at the operating margin and the extent to which cost savings are compensating for higher labour and other operating costs.

Booker could remain a drag

Booker – the British wholesale distributor and Tesco subsidiary purchased for £3.7 billion in 2018 - is another area to watch.

The wholesale business reported a 3.2% like-for-like sales decline in the first quarter. Tesco attributed part of the weakness to the ending of a lower-margin national account in August 2025, while the prior year had also benefited from favourable weather. On a two-year like-for-like basis, core retail sales were up 3.2%.

The October results should provide a clearer picture of whether the weakness is largely a timing and comparison issue or whether Booker is facing more persistent pressure.

Central Europe, by contrast, delivered 0.8% like-for-like growth in Q1, with food and online sales performing well. Online sales in the region increased 17.4%.

Cash flow and shareholder returns

Tesco's cash generation will also be closely watched.

The group generated £1.957bn of free cash flow in FY2025/26, up 11.8%, despite increased investment and higher cash tax payments. Net debt stood at £10.563bn at year-end, equivalent to 2.1 times EBITDA.

The strength of cash generation has allowed Tesco to return substantial amounts to shareholders. Alongside its progressive dividend policy, the company announced a further £750m share buyback, to be completed by April 2027. By 17 June, Tesco had already bought back £341m of shares.

The interim results should therefore provide an update on the pace of the buyback, cash generation and the balance sheet.

For income-focused investors, the combination of a growing dividend and an active share buyback makes Tesco an increasingly interesting case. You can find out more about the advantages of buying shares and how to build a dividend portfolio through our educational resources.

Online, Clubcard and F&F

Beyond the supermarket itself, investors will be watching Tesco's growing digital ecosystem.

Online UK sales rose 8.9% in Q1, while Tesco continued expanding its Whoosh rapid-delivery service. The group has also been investing heavily in Clubcard personalisation and Tesco Media, which offers suppliers advertising opportunities across Tesco's digital and physical retail estate.

The recent expansion of F&F Online is another development to watch. Tesco relaunched the online fashion proposition in September, adding hundreds of styles, more sizes and online-exclusive ranges.

These businesses are strategically important because they offer Tesco potential additional revenue streams beyond traditional grocery sales.

Analyst ratings and technical analysis of the Tesco share price

According to LSEG Data & Analytics analysts rate Tesco as a ‘buy’ with 3 ‘strong buy’, 8 ‘buy’, 4 ‘hold’ and 1 ‘sell’ recommendations with a mean long-term price target at 511.54p, around 7% above the current share price (as of 28 September 2026).

TipRanks has a ‘buy’ rating with a ‘5 Neutral’ Smart Score for Tesco.

The Tesco share price – up around 8.5% year-to-date – remains above its 2025-to-2026 uptrend line at 451.0p and, more importantly, above its January 411.7p low. While it stay above this level, the long-term uptrend is deemed to be bullish with the Tesco share price evolving in a wide sideways trading range since the beginning of the year.

Tesco weekly candlestick chart

On the daily candlestick chart the Tesco share price has been trading in a short-term uptrend since the middle of August and above its 200-day simple moving average (SMA) at 463.3p since the beginning of September.

A rise above the current September high at 487.6p would likely engage the late July high at 501.8p and perhaps also the June peak around the 520p mark. This bullish forecast will remain in play while the June trough at 428.5p holds on a daily chart closing basis.

​Tesco daily candlestick chart

What to watch on 8 October

The most important questions for investors are likely to be:

• UK like-for-like sales: has Tesco maintained momentum after the relatively soft 1.8% Q1 growth?
• Market share: is Tesco continuing to take share from competitors?
• Margins: can productivity savings offset wage, regulatory and investment costs?
• Booker: is the Q1 decline reversing as difficult comparisons fade?
• Profit guidance: does Tesco retain its £3.0bn–£3.3bn adjusted operating profit range?
• Cash flow: is the group still on track for £1.5bn–£2.0bn of medium-term free cash flow?
• Capital returns: how quickly is the £750m buyback progressing?

Tesco enters the interim results with a strong recent track record of taking market share, but the challenge is becoming more demanding. The company is deliberately investing in lower prices, better quality and service at a time when labour and other operating costs remain elevated.

The October results will therefore be less about whether Tesco is growing and more about how profitably it can grow. If sales and market-share momentum remain resilient while productivity savings continue to offset inflation, the company should be able to demonstrate progress towards the upper end of its financial framework. Conversely, a combination of slowing UK sales, persistent Booker weakness and margin pressure would put greater emphasis on Tesco's ability to deliver its cost-saving and productivity plans.

With £3.0bn–£3.3bn of adjusted operating profit and £1.5bn–£2.0bn of medium-term free cash flow currently guiding expectations, the 8 October update should provide an important checkpoint on whether Tesco's investment-led strategy is translating into sustainable earnings and cash-flow growth.

How to invest in Tesco shares

1. Do your research on Tesco, the interim results on 8 October and the key metrics to watch
2. Download IG Invest  or open a share dealing account with us
3. Search for Tesco (TSCO) in our platform or app
4. Choose the number of shares or value of money you'd like to invest
5. Place your trade