Tesco has widened its profit forecast for its current financial year amid growing uncertainty around the ongoing conflict in the Middle East.
The grocery giant reported it was providing a wider range of guidance than previously anticipated due to uncertainty around the duration of the conflict and the impact it would have on UK households.
Chief executive Ken Murphy said the business was doubling down on its commitment to help keep down the cost of the weekly shop. It comes after the Food and Drink Federation predicted that food inflation will reach over 9% by the end of 2026.
As a result, Tesco expects to deliver an adjusted operating profit of between £3bn and £3.3bn for its current financial year and is targeting a further £500m of savings this year through its Save to Invest programme.
The updated guidance comes as the supermarket chain reported an 8.5% increase in pre-tax profit to £2.4bn during the 53 weeks to February 28, 2026. Operating profit jumped 10.1% to £2.98bn in the period, but on an adjusted basis, edged up 0.6% to £3.bn.
Group sales excluding VAT and fuel increased 4.3% to £66.5bn at constant rates, with like-for-likes up 3.5%. Online sales jumped 11% in the period, with sales via its Tesco Whoosh platform surging 51%.
Tesco chief executive Ken Murphy said: “We are committed to doing whatever we can to help keep down the cost of the weekly shop, and with the conflict in the Middle East creating further uncertainty for consumers and the economy more broadly, that commitment matters more than ever.
“Over the last year, despite cost pressures from new regulations, we have increased our investments in keeping prices low, further improving quality and offering even better service. Customers are choosing to shop more with us as a result, leading to our highest market share for over a decade.
“Our investments have been made possible by our Save to Invest programme, which has delivered over £2.2bn of savings over the last four years, funding lower prices for customers and higher pay for colleagues, including our recent 5.1% increase in UK hourly pay.
“Recognising their exceptional service over the last year, I am also pleased to announce a £65m special performance award for colleagues in our stores, distribution centres and customer engagement centres.
He added: “Our further investments in value included tripling the number of products on Everyday Low Prices to 3,000, running alongside over 10,000 Clubcard Prices and more than 600 Aldi Price Match lines. We have also continued to invest in quality and innovation, with over 2,000 new and improved products across the year, and Finest growing 15% to reach sales of £3bn.”
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