Tesco Posts 6.5% Rise in Adjusted Operating Profit

Tesco PLC announced a 6.5% increase in adjusted operating profit to £1.783 billion for the half-year ended August 29, 2026, compared to £1.674 billion in the prior-year period. The results reflect continued investment in value and service, with growth across its UK & ROI and Central European segments, partially offset by a decline in Booker sales.

Group revenue, including fuel, rose 3.7% to £37.353 billion, driven by a 19.7% surge in fuel sales attributable to higher oil prices. Sales excluding fuel and VAT increased by 2.0% to £33.776 billion at actual rates, or 1.6% at constant rates. This sustained revenue growth demonstrates Tesco’s resilience in a market facing persistent inflationary pressures, as highlighted by broader trends in the Indian retail sector where strong consumer demand is contending with margin pressures.

Alongside the increase in operating profit, Tesco increased its interim dividend to 5.05 pence per share, a 5.2% increase year-over-year. The company also bolstered its share buyback program to £950 million, citing a strong balance sheet and robust cash delivery. Free cash flow increased by 21.0% to £1.570 billion, driven by higher cash profit and working capital inflows. Adjusted diluted earnings per share (EPS) increased by 12.2% to 17.3 pence.

Tesco’s adjusted net finance costs increased by 4.2% to £274 million, primarily due to lower interest income. Statutory profit after tax rose 11.8% to £1.062 billion. The company anticipates full-year adjusted operating profit between £3.15 billion and £3.30 billion, indicating continued confidence in its performance.

These results demonstrate Tesco’s ability to generate strong cash flow and deliver increased returns to shareholders while navigating a challenging macroeconomic environment marked by geopolitical uncertainty and inflationary pressures. The company's increased investment in its customer offer and capabilities, coupled with disciplined capital management, positions it for continued growth, though external factors like global interest rate movements create potential headwinds.