Tesco Plc (LON:TSCO) has announced its Preliminary Results for 2024/25.
Strong performance positions us to continue winning with customers.
| Performance highlights (on a continuing operations basis)1,2 | FY 24/25 | FY 23/24 | Change at actual rates | Change at constant rates |
| Group sales (exc. VAT, exc. fuel)3 | £63,636m | £61,477m | 3.5% | 4.0% |
| Group adjusted operating profit4 | £3,128m | £2,829m | 10.6% | 10.9% |
| of which: Retail adjusted operating profit | £2,973m | £2,760m | 7.7% | 8.1% |
| Free cash flow5 | £1,750m | £2,063m | (15.2)% | |
| Net debt6 | £(9,454)m | £(9,684)m | 2.4% | |
| Adjusted diluted EPS4 | 27.38p | 23.41p | 17.0% | |
| Dividend per share | 13.70p | 12.10p | 13.2% | |
| Statutory measures (on a continuing operations basis)1 | ||||
| Revenue (exc. VAT, inc. fuel) | £69,916m | £68,187m | 2.5% | |
| Operating profit | £2,711m | £2,821m | (3.9)% | |
| Profit before tax | £2,215m | £2,289m | (3.2)% | |
| Diluted EPS | 23.13p | 24.53p | (5.7)% | |
| Statutory measures (including discontinued operations)1 | ||||
| Profit for the year (after tax) | £1,630m | £1,192m | 36.7% | |
| Diluted EPS | 23.51p | 16.56p | 42.0% |
As a result of the disposal of the Group’s Banking operations, our Insurance and Money Services business (IMS) is now reported as part of the UK & ROI segment. The Retail adjusted operating profit figure of £2,973m (which excludes IMS adjusted operating profit of £155m) is presented above for the purposes of comparing to our previously published profit guidance.
Ken Murphy, Chief Executive “Our continued focus on value and quality, coupled with market-leading availability, has contributed to another year of increased customer satisfaction and our highest market share for nearly a decade. We have invested in bringing great prices to our customers throughout the year, and continued to innovate with over 1,600 new or improved products including 400 new Finest lines, where overall sales grew 15%.We are also making significant progress on our long-term growth opportunities, further enhancing our digital capabilities with increased personalisation, further improvements to our online experience and an expanded retail media offering.None of this would be possible without the dedication of our 340,000 colleagues and I want to thank them for all their hard work. We continue to invest in our market-leading package of colleague benefits, including over £900m in pay increases across the last three years.Building on our strong financial performance, robust balance sheet and positive momentum, we are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market. Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and see further opportunities to strengthen our competitiveness. By putting customers first, we will continue to create sustainable value for every stakeholder in Tesco.”
Strong financial performance and cash generation
| • | Group LFL7 sales up +3.1%, including UK +4.0%, ROI +4.6% and CE +2.2%; Booker LFL sales down (1.8)%, reflecting growth in core retail and catering, offset by ongoing decline in tobacco market and lower Best Food Logistics volumes | |
| • | Group adjusted operating profit4 up +10.9% at constant rates to £3,128m includes strong progress across both segments: | |
| • | UK & ROI up +10.3% to £3,016m, supported by strong volume performance and Save to Invest delivery; includes £155m contribution from IMS, with £46m of non-recurring items primarily due to a new five-year pet insurance contract | |
| • | Central Europe up +28.9% to £112m, driven by improved category mix, volume growth and further Save to Invest progress | |
| • | Adjusted diluted EPS1,4 up +17.0% to 27.38p, driven by higher Group adjusted operating profit, lower adjusted net finance costs and the benefit of our ongoing share buyback programme | |
| • | Statutory operating profit1 of £2,711m, down (3.9)% and statutory diluted EPS of 23.13p, down (5.7)%, include a £(286)m non-cash net impairment charge (LY: £28m release), reflecting higher discount rates, driven by increased government bond rates | |
| • | Free cash flow5 of £1,750m, towards top end of guidance range, reflecting strong trading performance; compares to £2,063m last year which benefited from higher trade payables due to elevated input cost inflation; Net debt6 down 2.4% to £(9,454)m | |
| • | Return on capital employed5 of 14.6%, reflecting growth in Group adjusted operating profit and disciplined capital allocation | |
Footnotes can be found on page 4.
Ongoing investments in our offer support customer satisfaction improvements and market share growth
| • | UK market share +67bps YoY to 28.3%, with share gains for 21 consecutive four-week periods and reaching highest level since 2016 during the year; ROI market share +29bps YoY to 23.9%, with share gains for 37 consecutive four-week periods |
| • | Overall brand perception in UK increased by +185bps YoY, stepping forward across all drivers, including reputation (+282bps), value (+242bps) and quality (+153bps) |
| • | Cheapest full-line grocer throughout the year; further improvement in price position against the market since January 2025 |
| • | Delivered market-leading availability and highest net promoter score in five years |
| • | Announced a +5.2% increase in UK store colleague pay, with hourly rate rising to £12.64 by end of August 2025 |
| • | Launched over 1,000 new products and improved over 600, underscoring our commitment to quality and innovation |
| • | Finest annual sales of £2.5bn, up 15% YoY; 400 new Finest products launched |
| • | Save to Invest progress, delivering c.£510m of savings in FY 24/25 as we simplified operations across the Group |
| • | Supporting our communities through Stronger Starts, awarding funding of £13m since July 2023 to over 12,200 projects; launch of ‘Fruit & Veg for Schools’ campaign, supporting 400 schools with over 5m portions of fruit & veg to date |
| • | Progress towards ambitious climate change targets, with a 65% reduction in Scope 1 and Scope 2 emissions versus 2015/16 baseline; signed our largest power purchase agreement to date, at Cleve Hill Solar Park in Kent |
Continuing to invest in long-term growth opportunities and capability
| • | Increase in Clubcard sales penetration across all markets: UK 84%, ROI 87%, Central Europe 88%; Group-wide Tesco app users at 18.0m, up +12% YoY, with proportion of digital Clubcard scans in UK +11ppts to 63% of Clubcard transactions |
| • | Increasingly personalised offer: rollout of Clubcard Challenges to 10m customers and trial of Your Clubcard Prices |
| • | Growing the Tesco Media and Insight Platform, with over 5,000 in-store screens; launched video advertising on Tesco.com and app, introduced store wrap advertising at scale and further enhanced self-serve platform for brands and agencies |
| • | Expanded Tesco Whoosh rapid-delivery service to over 1,500 stores, including launch into 42 large stores, helping expand depth of range and reach; active customers up 48% with further growth in basket size |
| • | Launch of Tesco Marketplace, now offering >400,000 third-party products across homeware, furniture and electronics, helping us expand our online range in a capital-light way, with commission earned on the value of each order |
| • | Online launch of F&F clothing scheduled to go live for customers in the year ahead |
CAPITAL RETURN PROGRAMME.
We see our share buyback programme as a critical driver of shareholder returns, reflecting the strength of our balance sheet and our confidence in both our strategy and our ability to continue to deliver strong future cash flows. In addition to £864m of dividends paid across the last year, we have now completed our April 2024 commitment to buy back £1bn worth of shares. Since October 2021, we have bought back £2.8bn worth of shares.
OUTLOOK.
Our investments over the last four years have resulted in the most competitive position and highest market share we have had for many years, leading to a strong financial position and positive trading momentum. We have delivered well against the multi-year performance framework we set out in 2021, and maintained a disciplined approach to capital, leading to strong cash generation and shareholder returns.
In the last few months, we have seen a further increase in the competitive intensity of the UK market. We are committed to ensuring that customers get the best value in the market by shopping at Tesco and we see further opportunities to protect and strengthen our competitiveness.
We are therefore providing guidance that gives us flexibility and firepower to be able to respond to current market conditions. As a result, for FY 25/26, we expect Group adjusted operating profit of between £2.7bn and £3.0bn (FY 24/25: £3,128m). We continue to expect free cash flow within our medium-term guidance range of £1.4bn to £1.8bn.
We are announcing today a further share buyback totalling £1,450m, to be completed by April 2026, comprising £750m funded by free cash flow and £700m funded by the sale of our Banking operations.
FY 25/26 is a 53-week financial year, but for comparability we will also report our key financial metrics on a 52-week basis. All financial guidance is provided on a 52-week basis.
STRATEGIC PRIORITIES.
Our strategic priorities ensure that we focus on offering great value, quality and convenience whilst rewarding loyalty. Through our colleagues, reach and supplier relationships, we are well-placed to serve our customers wherever, whenever and however they need us. Our strategy puts customers at the heart of everything we do, and guides us to deliver top-line growth, grow profit and generate cash and in doing so, deliver for all our stakeholders.
1) Magnetic Value for Customers – Re-defining value to become the customer’s favourite
| • | Winning value combination of Aldi Price Match on >600 lines, Low Everyday Prices on >1,000 lines and around 8,000 Clubcard Prices deals each week; Clubcard Prices save customers up to £392 off their annual grocery bill |
| • | Exclusive Clubcard deals on everyday services such as no mid-contract price rises with Tesco Mobile and Clubcard Prices available for car, home, pet and travel insurance policies |
| • | Further own-brand innovation across all tiers, including launches of the Taste Discoveries dinner-for-tonight range inspired by Japanese and Korean cuisine, and health-led High Protein and Gut Sense ranges |
| • | Further progress in customer satisfaction scores at Booker, with 700 prices locked until June 2025 |
| • | Expanded our Low Price Guarantee in Central Europe, adding an average of c.650 products per market |
2) I Love my Tesco Clubcard – Creating a competitive advantage through our powerful digital capability
| • | Clubcard celebrates 30 years with unrivalled customer reach; over 23m Clubcard households in the UK with new campaigns including 10,000 bonus points for customers who use Clubcard vouchers when booking with easyJet Holidays |
| • | Expanding the UK’s largest and most generous supermarket reward partner scheme, with Virgin Red and five new visitor attractions becoming reward partners; customers can now earn Clubcard Points with the purchase of a new Vauxhall car |
| • | Tesco Media and Insight Platform saw growth in active advertisers and spend per campaign, with the team ranked joint #1 in Flywheel’s European retail media rankings and shortlisted for Media Brand of the Year at the Media Week Awards |
| • | Over 9,000 retail media campaigns delivered; creativity enhancements included fully integrated Coca-Cola campaign over Christmas, comprising onsite and offsite media, exclusive competitions and products, and wrapping home delivery vans |
3) Easily the Most Convenient – Serving customers wherever, whenever and however they want to be served
| • | Opened 90 stores across the Group: 64 in the UK, 12 in ROI and 14 in Central Europe |
| • | Refreshed a further 463 stores across the Group including 100 large stores and 245 convenience stores in the UK |
| • | UK online sales up +10.2%, driven by growth in orders per week, with market share up +173bps YoY to 35.5% |
| • | Increase in UK online customer satisfaction, +8pts YoY and 150 new delivery vans launched, as we increase capacity; Delivery Saver subscribers at 770k, up +9% YoY |
| • | Integrated a further 566 net new Booker retail partners, taking the total outlets to just under 8,000; integration of Venus acquisition progressing well, with a new Venus distribution hub opened at our Makro branch in Manchester |
4) Save to Invest – Significant opportunities to simplify, become more productive and reduce costs
| • | Save to Invest progress, delivering c.£510m of savings for FY 24/25 |
| • | Continued progress across all areas, including goods & services not for resale, operations, property and central overheads |
| • | New robotic automation implemented at our Peterborough distribution centre, with Aylesford semi-automated distribution centre on track to open summer 2025 |
| • | End-to-end review of stock flow from suppliers to store, optimising waste performance and improving availability |
| • | Simplifying in-store routines, supported by the roll-out of new fresh-food fixtures which enable faster replenishment |
| • | Taking action to reduce stock loss, including security system enhancements at checkouts and investments in new technology at our Daventry security hub |
| • | Extending Save to Invest programme; seeking further c.£500m in FY 25/26 to help offset new operating cost inflation, including the impact of an increase in National Insurance contributions of £235m |
