Tesco Plc · LSE:TSCO
Tesco — Q2 2025 Earnings Presentation
44 slides from Tesco's earnings presentation, Oct 2, 2025
Slide 1: Tesco Interim Results 2025/26
Tesco Interim Results 2025/26. Ken Murphy, Chief Executive Officer Imran Nawaz, Chief Financial Officer 2 October 2025
Slide 2: Agenda
Agenda. 01. Introduction 02. Interim results 03. Strategic progress 04. Q&A 2
Slide 3: Introduction
| Introduction ~~] ss Ken Murphy
Slide 4: Delivering in a competitive market
Delivering in a competitive market. 1 2 3 4 Improvement in Further progress Focus on value, Strong market customer on long-term quality and service share performance perception opportunities 4
Slide 5: Growth across all areas of the business
Growth across all areas of the business. Group Free cash +5.1% sales growth1 £1,298m flow Group adj. Adj. diluted +1.6% operating +6.8% EPS growth3 profit growth2 1. YoY change at constant exchange rates, excluding VAT and fuel. 5 2. YoY change at constant exchange rates. 3. YoY change at actual exc
Slide 6: Trusted by our customers
Trusted by our customers. Brand perception vs competitors1 38 Overall +96 +6 36 brand NPS3 bps points 34 perception2 32 30 +89 +263 28 Value2 Satisfaction2 bps bps 26 24 22 +13 28 Market 20 Quality2 August 2020 25-Aug-20 25-Aug-21 Tesco 25-Aug-22 25-Aug-23 August 2025 bps consecutive periods share g
Slide 7: Further market share gains
Further market share gains. UK market share (%)1 ROI market share (%)1 28.4 23.7 23.6 27.6 27.0 22.6 26.7 22.1 2022 2023 2024 2025 2022 2023 2024 2025 7 1. Worldpanel by Numerator Total Till Roll for 12 weeks ended 7 September 2025 / comparable period in prior years.
Slide 8: A winning value proposition
A winning value proposition. Net switching gains £225m £175m Further investments in price, quality and service £125m £75m Higher than anticipated market share gains £25m Sep 24 Sep 25 Winning share from the (£25)m majority of our key competitors Discounters Full-line grocers Rest of the Market Total
Slide 9: Investing in quality across our ranges
Investing in quality across our ranges. Finest sales +16% with over 200 Over 470 new products and 560 Winner of “Retailer of the Year” at new products improved across own-brand ranges the Free From Food Awards 2025 9
Slide 10: I love my Tesco Clubcard
I love my Tesco Clubcard. New features on Tesco app and 30 Years of Clubcard celebrations Clubcard points for charging at Scan as you Shop devices continue with exclusive offers Pod EV points 10
Slide 11: Working together
Working together. £180m investment in colleague pay More than 64,000 colleagues participating in company share schemes Personal safety app offered to all UK colleagues Championing an inclusive and gender-equal workforce 11
Slide 12: Committed to all our stakeholders
Committed to all our stakeholders. Communities Planet Suppliers • Expanded Stronger Starts Fruit & Veg • New PPA with EDF - Hare Craig wind farm in • Supplier satisfaction up 1ppt YoY to 88%1 programme to 500 UK primary schools Scotland due to start generating in 2028 • Additional financial incentiv
Slide 13: Strong progress in H1
Strong progress in H1. Decisive action to further invest in value, quality and service Strong UK market share gains, building on already strong momentum Competitive intensity remains Creating sustainable value for all our stakeholders 13
Slide 14: Interim results
Interim results. Imran Nawaz 14
Slide 15: Performance headlines
Performance headlines. On a continuing operations basis1 Group sales Adj. Op. Profit 2 3 Like-for-like sales growth across all markets +5.1% £1,674m Higher than anticipated market share gains in response Like-for-like +4.3% +1.6% vs. last year to our investments in value, quality and service Free ca
Slide 16: Segmental performance
Segmental performance. On a continuing operations basis Change at Adjusted Change at - Sales 1 constant LFL operating constant Margin3 rates profit2 rates UK & ROI £26,211m 5.6% 4.9% £1,468m 2.1% 5.0% Booker £4,734m 2.4% 1.7% £162m 0.6% 3.4% Central Europe £2,106m 5.0% 3.4% £44m (11.2)% 2.0% Group £
Slide 17: UK & ROI: UK
UK & ROI UK. LFL1 sales +4.9%; continued market share gains LFL – Food / LFL - Channel view Non-Food view +77bps2 with further volume growth excluding toys LFL Food +5.7%; volume growth driven by ongoing growth investments in value and customer experience +5.7% +5.0% Large 4.5% Finest +16.2%; in thi
Slide 18: UK - Online
UK & ROI UK - Online. Sales growth of +11.4%, driven mainly by volume H1 25/26 YoY change Online market share1 of 36.9%; year-on-year Sales inc. VAT £3.7bn 11.4% growth of +112bps Orders per week 1.45m 12.1% Delivery Saver subscribers up +9.3% to 788k Basket size2 £111 2.8% % of UK total sales 14.0%
Slide 19: ROI
UK & ROI ROI. LFL sales +4.8%, supported by volume growth LFL – Food / LFL - Channel view Non-Food view excluding toys New space contributing +1.3ppts to total growth, 5.1% with 8 new stores in the last 12 months 18.8% +2.0% Food sales +5.1% with strong contribution from fresh food and continued gro
Slide 20: Booker
Booker. Core Retail sales +4.1%; strong growth in symbol Sales LFL brands1 and 275 net new retail partners Core Retail £1,725m 4.1% Core Catering sales +5.7%, with volume growth Core Catering2 £1,461m 5.7% supported by warm weather benefit Tobacco £810m (8.8)% Tobacco market continues to decline Bes
Slide 21: Central Europe
Central Europe. LFL sales +3.4%, with food sales up +4.0%; targeted LFL – Food / LFL – Channel view investments to protect competitiveness Non-Food view 19.1% Improved NPS across all countries 4.0% Economic and regulatory pressures continue throughout the region 4.9% 2.4% Online growth of +19.1%, su
Slide 22: Group operating profit
Group operating profit. UK & ROI Adjusted Operating Profit1 • Strong trading performance and continued £1m delivery of Save to Invest £29m £1,674m • More than offset investment in customer offer £(5)m and ongoing cost inflation • Strong contribution from IMS £1,649m Booker • Strong sales growth in c
Slide 23: Statutory profit after tax
Statutory profit after tax. H1 25/26 H1 24/25 YoY Adjusting items of £(71)m reflects: £m £m £m • Amortisation of acquired intangibles of £(38)m Adjusted operating profit 1,674 1,649 25 • Restructuring and property costs of £(20)m Adjusting items1 (71) (37) (34) • Bank separation costs of £(13)m Oper
Slide 24: Free cash flow
Free cash flow. H1 H1 Working capital inflow of £408m; year-on-year 25/26 24/25 increase driven by strong sales performance £m £m Cash generated pre-working capital 2,426 2,382 Cash capex of £716m; more even phasing of Decrease in working capital 408 169 investments versus FY 24/25 Operating cash fl
Slide 25: Balance sheet metrics
Balance sheet metrics. 1 2 Net debt Fixed charge cover Net debt1 increase reflects partial return of bank proceeds 2.0x 2.0x 4.3x 4.2x £1,149m Net debt ratio 2.0x reflects strong balance sheet £9.9bn £9.5bn £1,136m £144m £159m Fixed charge cover improved to 4.3x £7.8bn £7.7bn £1,005m £977m Pension d
Slide 26: Capital expenditure
Capital expenditure. ROCE2,3 15.2% 14.6% Prioritising high returning areas, including 13.4% distribution automation and digital platforms 11.8% Continued investment in our estate; FY24/25 38 new openings1 and 112 stores refreshed WACC4 H1 capital expenditure £667m; expect FY c.£1.5bn FY 22/23 FY 23/
Slide 27: Updated outlook
Updated outlook. H1 investments mitigated by: • Better than expected customer response to our actions FY 25/26 Guidance • Strong Save to Invest contribution • Benefit of extended period of good weather Group adjusted operating profit between £2.9bn and £3.1bn1 Competitive intensity remains elevated
Slide 28: Multi-year performance framework
Multi-year performance framework. • Increasing customer satisfaction relative to the market Drive top-line growth • Growing or at least maintaining our core UK market share Generate £1.4bn to £1.8bn free cash flow per year • Leveraging our assets efficiently across Grow absolute all channels profits
Slide 29: Long term momentum
Long term momentum. H1 adjusted diluted EPS1 Continued investment in customer offer CAGR 13.7% 15.43 14.45 12.26 10.50 Strong consistent earnings growth Cash generation funding capital returns 2022/23 2023/24 2024/25 2025/26 29 1. Adjusted diluted EPS before adjusting items.
Slide 30: Strategic progress
Strategic progress. Ken Murphy 30
Slide 31: Our strategic priorities
Our strategic priorities. Magnetic I love my Easily the Save to value for Tesco most Invest customers Clubcard convenient Re-defining value to become Creating a competitive Serving customers wherever, Simplify, become more the customer’s favourite advantage through powerful whenever and however they
Slide 32: Magnetic value for customers
Magnetic value for customers. Price positioning1 Quality perception2 35 100 90 30 80 25 Tesco Asda Morrisons Sainsbury’s Sep232020 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 23 Aug232025 Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun 20 20 21 21 21 21 22 22 2
Slide 33: Investing in the core of our business
Investing in the core of our business. Save to Invest progress across operations, property and central overheads 38 new stores opened in the UK, Ireland and Halstead Superstore Central Europe, and a further 112 refreshed Opened new semi-automated fresh food distribution centre in Aylesford Wokingham
Slide 34: Enhancing our leading online offer
Enhancing Tesco Whoosh Orders +48% with average our leading basket size of c.£30. Recently launched in ROI online offer. UK online F&F online 2.2m active Over 3m site customers, with over visits per month, 130 new vans added to shopping over boost capacity 2,000 products 34
Slide 35: Personalised customer engagement
Personalised customer engagement. GoodMorning morningMichelle. Michelle. 10:07 2,622 4 points coupons Michelle, 35
Slide 36: Meeting more customer needs
Meeting more customer needs. Save money on Rated ‘Excellent’ with >60,000 reviews peace of mind. Life insurance added to Tesco Mobile offers exclusive Clubcard F&F Home provides timeless and range of products sold by offers, no roaming fees and award- affordable designs at great prices, Tesco Insura
Slide 37: Powerful retail media capability
Powerful retail media capability. Continued development of dunnhumby Sphere end-to-end retail media platform >600 total clients Growth in smaller brand advertising Welcome, Jane with tailored and self-serve products Manage your Retail Media Bookings Launched video advertising on Tesco app +555 and r
Slide 38: Building capability with data and AI
Building capability with data and AI. Powering greater Growing supplier Product innovation and Driving operational customer insight partnerships range optimisation efficiencies A few highlights Using Clubcard data to predict product AI-powered range curation tool Tesco Hive and Bumblebee c.100k c.30
Slide 39: Summary
Summary. Strong customer response and market share gains Continued focus on value and product innovation Investing in long-term growth opportunities and capability Expect FY 25/26 Group adjusted operating profit between £2.9bn and £3.1bn Creating sustainable value for all our stakeholders 39
Slide 40: Appendix
A ppendix G5 oa
Slide 41: Guidance
Guidance. Group profit FY 25/26 Adjusted operating profit between £2.9bn and £3.1bn Free cash flow Within our medium-term guidance range of £1.4bn to £1.8bn Capex Expect full year capital expenditure of c.£1.5bn Net finance costs1 Broadly in line with last year (FY 24/25: £(536)m) Leverage ratio Tar
Slide 42: Debt and liquidity
Debt and liquidity. Debt maturity profile £bn Debt Maturities Sustainability-Linked Bond 2025 Issuance Smooth debt maturity profile 1.00 0.90 • Less than £1bn maturing in any one year 0.80 • Weighted average maturity of c.6 years 0.70 0.60 0.50 Weighted average interest cost of c.4.6% 0.40 0.30 0.20
Slide 43: Adjusting items – H1 25/26
Adjusting items – H1 25/26. H1 25/26 H1 24/25 £m £m Amortisation of acquired intangible assets (38) (38) Separation costs related to disposal of Banking operations (13) (3) Restructuring and property (costs) / income (20) 4 Total adjusting items included within operating profit (continuing operation
Slide 44: Disclaimer
Disclaimer. Certain statements made in this document are forward-looking statements. For example, statements regarding future financial performance, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", “should”, "anticipate", "well-placed",