London, April 22, 2026, 19:09 BST
- Tesco PLC began a buyback of up to £750 million, with the first £250 million tranche to be run by Citigroup.
- The move comes days after Tesco gave a wide profit outlook for the year to February 2027, citing uncertainty from the Iran war.
- UK inflation rose to 3.3% in March, adding pressure on shoppers and grocers.
Tesco PLC started a share buyback of up to £750 million on Wednesday, pressing ahead with cash returns even as Britain’s biggest grocer faces a more uncertain year for prices and consumer demand.
The company said the programme would run by April 2027, with Citigroup Global Markets buying ordinary shares on the London Stock Exchange and Cboe Europe. The first tranche is worth up to £250 million, and Tesco said the purchases are aimed at cutting its share capital.
The timing matters. Investors are weighing Tesco’s cash generation against a fresh inflation shock in Britain, where official data on Wednesday showed consumer price inflation rose to 3.3% in March from 3.0% in February, with food and non-alcoholic drink prices up 3.7% year on year.
Tesco last week forecast adjusted operating profit — a company measure of profit before some one-off items — of £3.0 billion to £3.3 billion for the year to February 2027, compared with £3.152 billion in 2025/26. Bernstein analyst William Woods said the guidance looked “careful and conservative” in the face of the Middle East war. Reuters
Shares in Tesco closed 1.5% higher at about £4.95 on Wednesday, outperforming a weaker FTSE 100 session, according to MarketWatch data. Volume was below the 50-day average.
The buyback keeps Tesco’s capital-return story in place after a year in which the company also proposed a 14.5 pence total dividend. Retail Sector reported that Tesco has returned about £4.3 billion through buybacks since October 2021, at an average price of 317 pence a share.
That is a useful signal in a sector where margins remain thin and price claims are watched closely. Buybacks reduce the number of shares in issue, which can lift earnings per share if profits hold up.
Tesco’s market position gives it more room than many rivals. Worldpanel by Numerator data cited by Reuters showed Tesco and Sainsbury’s won market share over the 12 weeks to March 22, while Asda continued to lose share and Lidl remained the fastest-growing bricks-and-mortar grocer.
Chief Executive Ken Murphy has played down a direct grocery shock so far. “We are not seeing any meaningful inflation coming through,” he told reporters last week, apart from fuel costs. London South East
But that is the risk. If energy, fertiliser and transport costs feed deeper into food prices, Tesco may have to absorb more cost to protect its price position, or pass it on and risk weaker demand. The Guardian reported last week that the company had warned profits could fall this year if the economic hit from the conflict worsens.
For now, the board is betting that Tesco can do both: keep prices sharp enough to defend share, and still send surplus cash back to investors. That is a narrower path than it looked a month ago.
