Tesco Shares Jump as Grocer Lifts Profit Guidance Floor and Buyback

Tesco (LON: TSCO) shares jumped after the grocer raised the floor of its full-year profit guidance and increased its share buyback. The company published interim results yesterday for the 26 weeks ended the 29th of August, with a webcast for analysts and investors at 9.00am yesterday.

Tesco now expects group adjusted operating profit for 2026/27 of £3.15bn to £3.3bn, against the £3.0bn to £3.3bn it communicated in April. Free cash flow guidance is unchanged at £1.5bn to £2.0bn.

The buyback for the current year rises to £950m from £750m. Tesco had bought back £550m of shares since the 16th of April up to the close yesterday, and expects the programme to complete by April 2027. Capital spending guidance rises to about £1.7bn from about £1.6bn.

First-half adjusted operating profit rose 6.5% to £1,783m from £1,674m, on group sales, excluding VAT and fuel, up 2.0% to £33,776m. Adjusted diluted earnings per share climbed 12.2% to 17.3p from 15.4p. The interim dividend is 5.05p, up from 4.80p, payable on the 20th of November to shareholders on the register at the 16th of October.

Chief executive Ken Murphy pointed to customer satisfaction, which Tesco said was its highest on record.

Customers are at the heart of everything we do, and I am proud that we have achieved our highest-ever customer satisfaction score, reflecting our continued focus on value, quality and service.

Ken Murphy, chief executive, Tesco

Two points temper the picture. Tesco’s UK market share, measured by Worldpanel, was 27.8%, down 24 basis points on a year earlier, though up 23 basis points over two years. Free cash flow of £1,570m, up from £1,298m, included a net timing benefit of about £250m that unwinds in the second half.

Net debt stood at £10,037m, down £526m since February. Tesco’s next update, its third-quarter and Christmas trading statement, is due on the 14th of January 2027.