London, June 17, 2026, 13:05 BST
- Tesco shares dropped 1.7% to 454.40p in delayed London trading. The stock lagged the FTSE 100, which was little changed.
- Tesco is set to release its first-quarter trading update on June 18.
- Morrisons said the UK grocery sector remains “highly competitive” in its latest update. UK CPI was flat at 2.8% in May.
Tesco PLC shares dropped in London on Wednesday ahead of the supermarket’s first-quarter update. Investors saw another sign of strain in the UK grocery sector and continued weak consumer demand.
The stock was last seen at a sell price of 454.40p at 12:48 BST, losing 7.90p, or 1.71%, on Barclays delayed market data. The FTSE 100 slipped 0.03%.
Tesco’s Q1 trading statement lands on Thursday. Investors want to see if Tesco is keeping market share up while holding the line on margins, as price cuts and promotions continue. The company reaffirmed the June 18 update in April’s results statement.
Morrisons gave a competitive warning. The chain, which is privately owned, reported on Wednesday that like-for-like sales were up 2.2% in its second quarter. That’s slower growth than the 2.8% seen in the previous quarter. Chief Executive Rami Baitieh called the start to the third quarter “encouraging” but said the group remains focused on input inflation. Reuters
Morrisons stayed behind Tesco, Sainsbury’s and Lidl last month, according to Reuters citing industry data. Lidl pushed past Morrisons and now ranks as the UK’s fifth-biggest grocer. Tesco keeps its lead. The main competition is still over value, range and convenience ahead of store numbers.
Tesco came into the update with momentum. Back in April, the grocer posted 52-week sales excluding VAT and fuel of 66.59 billion pounds, a gain of 4.3% at constant rates. Adjusted operating profit rose 0.6% to 3.15 billion pounds. Free cash flow increased 11.8% to 1.96 billion pounds.
Chief Executive Ken Murphy said at the time Tesco is sticking with efforts to “keep down the cost of the weekly shop,” pointing to its price investment, Clubcard deals, and Aldi Price Match. Tesco said its UK market share was 28.5%, rising 24 basis points from a year earlier. Online sales climbed 11% to over 7 billion pounds.
UK inflation data was a mixed bag. Consumer price inflation stayed at 2.8% in May, the same as April, according to the Office for National Statistics. CPIH was unchanged at 3.0%. Reuters said cheaper food helped balance out pricier airfares and petrol. Not a big shift for grocery shoppers, but some help. Office for National Statistics
Analyst sentiment is mostly upbeat. LSEG data on Investors Chronicle puts the median 12-month target on Tesco at 520p, with analyst forecasts between 460p and 560p. The consensus as of June 11: two “buy,” nine “outperform,” four “hold,” and one “sell.” Investors Chronicle
Margin is still the concern. Tesco says it expects adjusted operating profit for 2026/27 to come in between 3.0 billion and 3.3 billion pounds, giving a wider range. The company cited the Middle East conflict and possible pressure on UK households and the economy as reasons. If food inflation picks up, energy bills climb or rivals go even harder on price, Thursday’s update may not have much headroom for upgrades.
