Tesco rides festive cheer to stronger sales and market share gains

Tesco LON:TSCO, Britain’s largest food retailer, reported a robust performance over the crucial Christmas trading period, reinforcing its competitive advantage in an era of squeezed household budgets and intense market rivalry.

The grocer’s latest trading statement, covering the 13 weeks to 22 November and the six weeks to 3 January, showed broad-based like-for-like sales growth across its core markets and bolstered guidance for full-year profit.

The group’s UK like-for-like sales grew by 3.9% in the third quarter and 3.2% during the festive six-week period, delivering a 3.7% rise over the combined 19-week stretch. In the Republic of Ireland, Tesco achieved even stronger momentum, with like-for-like sales up 5.0% in Q3 and 3.8% over Christmas, resulting in a 4.6% gain for the period.

Collectively, UK & ROI like-for-like sales expanded by 4.0% and 3.3% over the two respective periods, equating to a 3.8% increase overall.

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Central Europe also contributed modest growth, while Booker, Tesco’s wholesale and convenience arm, saw softer performance as tobacco market contraction and contract exits weighed on results. Nevertheless, the group’s overall sales trajectory underscored resilience in the face of lingering macroeconomic headwinds and discount-driven competition.

Tesco’s big win in UK market share

Chief executive Ken Murphy struck an upbeat tone, emphasising gains in market share and customer satisfaction. Tesco reported its highest UK market share in more than a decade, with value and volume share climbing in consecutive reporting periods. The grocer’s focus on competitive pricing and product investment helped drive double-digit growth in fresh food, while online and same-day delivery services widened their appeal.

“We delivered a strong Christmas for our customers,” Murphy told investors. “Our investments in value, quality and service drove further gains in customer satisfaction and strong growth in fresh food, contributing to our highest UK market share in over a decade.”

Tesco’s strategic emphasis on value was evident in its expanded price commitments. Over the festive period, the group broadened its Everyday Low Prices range and maintained Aldi-style price matching on key lines, alongside thousands of Clubcard-exclusive offers. In a cost-conscious environment, such moves appeared to resonate with shoppers, helping Tesco defend volumes and attract switching from competitors.

Digital commerce was another highlight. Online sales recorded double-digit growth, and Tesco’s fast-delivery service Whoosh added more than 250,000 new customers during the period. The retailer also enlisted tens of thousands of additional seasonal colleagues to manage heightened demand and introduced extra delivery slots in the run-up to Christmas, underpinning operational agility.

Confidence returning for Tesco shareholders

Investors are likely to react positively to the update, which dovetails with broader confidence around Tesco’s financial trajectory. Earlier in 2025, Fitch raised Tesco’s credit rating to ‘BBB’ with a stable outlook, citing its market leadership, disciplined pricing strategy and improving cash management.

The outlook section of the trading statement lifted expectations for full-year adjusted operating profit to the upper end of the previously guided £2.9bn–£3.1bn range. Free cash flow is also expected to remain within the retailer’s medium-term target band.

Pressure on margins, however, is unlikely to dissipate. Tesco and its peers continue to navigate cost inflation, rising labour expenses and competitive pricing dynamics. Yet by prioritising differentiated service, product quality and digital fulfilment, Tesco appears to have fortified its defences against both discounters and online challengers.

In a market where consumer spending remains cautious, Tesco’s Christmas performance underscores the enduring leverage of scale, value and customer engagement in British grocery retail. The festive trading period, often a bellwether for annual results, suggests the group may be better positioned than most to sustain growth through 2026.