London, April 22, 2026, 19:09 BST
- Tesco PLC kicked off a buyback program targeting up to £750 million, tapping Citigroup to handle the initial £250 million tranche.
- Tesco’s decision follows a recent update: just days ago, the company set a broad profit forecast for the period through February 2027, pointing to ongoing Iran war uncertainty.
- UK inflation climbed to 3.3% in March, squeezing both shoppers and supermarkets.
Tesco PLC kicked off a share buyback of up to £750 million on Wednesday, moving forward with investor payouts despite a cloudier outlook for prices and shopper demand this year—the UK’s largest grocer isn’t backing away from handing out cash.
Tesco announced the buyback will continue through April 2027, with Citigroup Global Markets handling purchases of ordinary shares on both the London Stock Exchange and Cboe Europe. The initial tranche, capped at £250 million, is designed to reduce Tesco’s share capital, the company said.
The timing’s key here. Investors are sizing up Tesco’s cash flow just as new inflation figures hit: Britain’s consumer price inflation climbed to 3.3% in March, up from 3.0% in February. Food and non-alcoholic drink prices jumped 3.7% year-on-year, according to Office for National Statistics data released Wednesday.
Tesco is projecting adjusted operating profit between £3.0 billion and £3.3 billion for the year ending February 2027, up from £3.152 billion expected in 2025/26. Bernstein’s William Woods called the outlook “careful and conservative,” especially given the backdrop of conflict in the Middle East. Reuters
Tesco shares finished Wednesday up 1.5% at roughly £4.95, managing to beat a softer FTSE 100, MarketWatch data show. Trading was lighter than the 50-day average.
Tesco’s capital-return plans remain on track with the latest buyback, coming on the heels of a proposed 14.5 pence total dividend this year. Since October 2021, the company has handed back roughly £4.3 billion via buybacks, Retail Sector noted, with the average price at 317 pence per share.
It’s a telling move in a space where margins are still skinny and pricing chatter gets heavy scrutiny. Fewer shares on the market thanks to buybacks—assuming profits don’t slip—will push up earnings per share.
Tesco holds a stronger spot than most competitors. According to Worldpanel by Numerator figures reported by Reuters, Tesco and Sainsbury’s both gained share in the 12 weeks ending March 22. Asda kept sliding, while Lidl again led growth among brick-and-mortar grocers.
Chief Executive Ken Murphy isn’t sounding alarms about food prices just yet. “We are not seeing any meaningful inflation coming through,” he told reporters last week, with the exception of fuel costs. London South East
That’s the concern. Higher energy, fertiliser and transport bills could push food prices up further, forcing Tesco to either shoulder more of the burden to hold its price edge—or hike prices and face potential drops in demand. Last week, The Guardian reported the retailer had warned that profits might suffer this year if fallout from the conflict intensifies.
The board’s current wager is that Tesco can thread the needle—holding prices low enough to protect its market share, while also returning excess cash to shareholders. That margin for error has shrunk since last month.
