Slides
Page 1
Interim Results 2026/27 Ken Murphy, Group Chief Executive Imran Nawaz, Chief Financial Officer 8 October 2026
Page 2
2 Continuing to strengthen the customer offer and create long- term value Highest ever customer satisfaction Strong financial performance Strong progress against our strategic ambitions Pictures will be updated post in-store photo shoot
Page 3
3 Significant growth across all customer satisfaction measures 17 33 Aug 21 Aug 26 1. BASIS Global Brand Tracker 13 weeks rolling NPS 3 Our NPS has increased +16ppts since August 20211 Progress across all measures in the first half1 +162bps +168bps +162bps +47bps +90bps +209bps Ease Quality Range Reputation Reward Value
Page 4
4 Highlights across the first half Significant progress for customers and laying the foundations for future growth Aug 21 Aug 26 Customer satisfaction at an all-time high Over 800 new and improved products More Your Clubcard Prices; rolling out AI meal planner UK’s #1 for rapid grocery + Tesco now on Uber Eats & Deliveroo New F&F website showcasing our full range
Page 5
55 Our colleagues are our greatest ambassadors Over £200m invested in UK store colleague pay1, alongside broad package of benefits Rolled out cross-store shifts, giving colleagues more flexibility Our largest investment in colleague training for over five years Creating 5,000 work experience placements for 18-24 year olds through 'Opening Shift' scheme 1. Total annual investment in hourly pay for UK store colleagues from 29 March 2026 5
Page 6
6 Delivering for all our stakeholders Suppliers #1 in Advantage supplier survey for 11th year Communities Doubling our Free Fruit & Veg for Schools programme Shareholders Further returns via dividends and buyback Planet Six new and updated sustainability commitments
Page 7
77 Financial Performance Imran Nawaz, Chief Financial Officer
Page 8
8 Performance headlines Group sales1 +1.6% Like-for-like2 +1.0% Group adj. op. profit1 £1,783m +6.3% vs. last year EPS3 17.3p +12.2% vs. last year Free cash flow £1,570m +21.0% vs. last year4 Net debt5 £(10,037)m Net debt / EBITDA ratio at 2.0x Dividend 5.05p +5.2% vs. last year4 Further sales growth, building on strong performance last year Strong profit growth: improved mix and S2I delivery offsetting customer investments and cost inflation Increasing contribution from newer income streams including Tesco Media and Whoosh Another period of strong cash delivery Strong balance sheet; net debt ratio 2.0x 1. Group sales and Group adjusted operating profit change at constant rates of exchange. Group sales exclude VAT and fuel 2. Like-for-like sales growth on a 1-year basis unless stated otherwise 3. Adjusted diluted EPS. Change shown at actual exchange rates 4. Change shown at actual exchange rates 5. As at the balance sheet date
Page 9
9 • Further sales growth on top of strong performance last year • Profit growth ahead of sales in all segments, supported by strong Save to Invest delivery Segmental performance H1 26/27 Sales1 (£m) Change at constant rates 1-year LFL2 2-year LFL3 Profit (£m)4 Change at constant rates Margin5 Margin change UK & ROI 26,848 2.4% 1.7% 6.6% 1,557 6.0% 5.1% 9 bps Booker 4,616 (2.5)% (2.6)% (1.0)% 163 0.1% 3.5% 10 bps Central Europe 2,312 1.1% 0.4% 3.8% 63 38.4% 2.6% 62 bps Group 33,776 1.6% 1.0% 5.2% 1,783 6.3% 4.8% 13 bps 1. Group sales exclude VAT and fuel 2. LFL refers to like-for-like sales growth 3. Two-year LFL is calculated by comparing current year sales to sales in 2024/25 for those stores that were trading in both years 4. Adjusted operating profit 5. Margin % at actual exchange rates Sales change Adj. operating profit
Page 10
10 Online LFL +8.4%, with market share1 up +16bps UK Further sales growth Large stores grow against demanding base Particularly strong growth in Finest and Online 2.1% Total sales growth 1.5% LFL sales growth 6.4% 2-year LFL sales growth Tesco Finest sales +8.9% Whoosh sales +37% driven by increased orders and basket size 1. Online market share based on Worldpanel by Numerator Total Grocery for 12 weeks ended 6 September 2026, excludes rapid delivery 2. Orders per week excludes Whoosh, Marketplace and F&F Online 2.4% Food LFL sales growth Opened 19 Express stores +1 Large store in Whitburn Tesco Express sales broadly flat Total convenience LFL (1.7)% Large store LFL +1.1% Grocery Home Shopping2 order growth +4.9%; Delivery Saver +6.1%
Page 11
111. Worldpanel by Numerator Total Grocers Total Till Roll for 12 weeks ended 6 September 2026, and equivalent period in prior years 2. NIQ Total Grocers Total Till Roll ended 5 September 2026 Market share performance One-year Worldpanel change reflects exceptionally strong prior year base, as anticipated Four-year Worldpanel share gain now +113bps1 Lapping exceptional performance in H1 Latest four-week Nielsen UK market share read up +14bps; includes rapid grocery2 (24)bps +113bps +14bps One-year change (12-week) Four-year change (12-week) One-year change (4-week) Worldpanel1 Nielsen2 (includes rapid grocery)
Page 12
12 ROI Strong sales growth1 Sales and volume growth across all channels 6.7% Total sales growth 4.1% LFL sales growth 9.0% 2-year LFL sales growth 12.8% Tesco Finest growth Strong market share and further reach Large +3.3% Online +11.9% Convenience +3.1% 1. Growth shown at constant exchange rates 2. ROI market share based on Worldpanel by Numerator Total Grocers Total Grocery for 12 weeks ended 6 September 2026 Whoosh now operating from nearly half of Express stores Market share2 +44bps to 24.1% supported by LFL and new space 9 new stores in the last 12 months including 4 Large stores
Page 13
13 Booker Sales (£m) LFL 2-year LFL Core retail1 1,714 (0.6)% 3.3% Core catering 1,418 (3.2)% 2.3% Best Food Logistics 744 0.6% 2.1% Booker excluding tobacco 3,876 (1.4)% 2.7% Tobacco 740 (8.9)% (16.6)% Total Booker 4,616 (2.6)% (1.0)% 1. Core retail LFL sales change includes a c.(200)bps impact from the exit of a lower-margin national account in August 2025. Excluding this impact, Core retail LFL sales grew 1.4% and Booker excluding tobacco LFL sales declined (0.5)% Underlying progress during the period 1-year LFL performance reflects contract exit in core retail1, strong base in catering & tobacco 2-year LFL sales up 2.7% (exc. tobacco), with growth across all parts of the business Better buying and Save to Invest support profit
Page 14
14 Central Europe Volume-led sales growth Strong profit growth, supported by sales 1.1% Total sales growth 0.4% LFL sales growth 3.8% 2-year LFL sales growth 19.1% Tesco Finest growth Extending our reach 85% online delivery coverage 6 new stores opened in the first half, including 3 Large stores 17 new dotcom sites opened within existing stores Profit up +38% driven by volume growth, improved mix and S2I Large and Convenience LFL sales broadly flat Online LFL +19.2% 1. Growth shown at constant exchange rates
Page 15
15 £1,674m £88m £1m £17m £3m £1,783m Group adjusted operating profit bridge2 Group adjusted operating profit Group adjusted operating profit up +6.5%1 Sales growth, Save to Invest and newer income streams helping drive profit growth Ongoing investments into price, quality and service H1 25/26 UK & ROI Booker Central Europe Currency Effect H1 26/27 Margin1 5.1% 3.5% 2.6% 4.8% Margin change1 +9bps +10bps +62bps +13bps 1. At actual exchange rates 2. Year-on-year change by segment shown before adjusting items and at constant exchange rates +6.5% growth
Page 16
16 Further Save to Invest progress £0.0bn £0.5bn £1.0bn £1.5bn £2.0bn £2.5bn £3.0bn FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 Cumulative Save to Invest Cumulative saving H2 expected saving On track to deliver £500m Save to Invest this year, contributing to >£2.7bn in five years In-year savings include: • Online picking optimisation • AI-led in-store replenishment improvement • Energy efficiency measures • Projects to further reduce inventory loss
Page 17
17 A meaningful and growing contribution from newer income streams Complementary to our core food business Leverage our existing asset base Strong sales growth and highly attractive returns
Page 18
18 £m H1 26/27 H1 25/26 Change Adjusted operating profit 1,783 1,674 +6.5% Adjusted net finance costs (274) (263) JVs and associates (4) (1) Tax on adjusted profit (404) (379) Adjusted profit after tax 1,101 1,031 +6.8% Adjusting items after tax (39) (81) Statutory profit after tax 1,062 950 +11.8% Adjusted and statutory profit after tax Adjusted profit after tax up +6.8% • Adjusted net finance cost increase reflects return of Bank proceeds during FY 25/26 • Adjusted effective tax rate steady at 26.8% Statutory profit after tax up +11.8% • Reflects lower level of adjusting items
Page 19
19 Adjusted diluted EPS Adjusted diluted EPS bridge1 1. Adjusted diluted EPS as per the Group’s APM definition. Change shown at actual exchange rates 2. Return of Bank proceeds reflects full year effect of EPS accretion from additional share buyback following the sale of our banking operations 15.4p 1.0p 0.5p 0.4p 17.3p H1 25/26 Adj. profit after tax Ongoing share buyback Return of Bank proceeds2 H1 26/27 +6.7ppts +3.2ppts +2.3ppts +12.2% 12.2% EPS growth +6.7ppts driven by strong growth in adjusted profit after tax +5.5ppts total share buyback benefit
Page 20
20 Strong Free cash flow delivery • Underlying Free cash flow in line with H1 25/26 • Also includes a c.£250m net benefit, primarily due to timing of payroll cycle which reverses in H2 • Working capital inflow also reflects seasonality and strong working capital management • Step-up in cash capex as expected Free cash flow £m H1 26/27 H1 25/26 Cash generated pre-working capital 2,638 2,426 Decrease in working capital 567 408 Operating cash flow 3,205 2,834 Cash capex1 (757) (716) Net interest paid (268) (269) Tax paid (241) (226) Repayments of obligations under leases (324) (314) Other2 (45) (11) Free cash flow 1,570 1,298 1. Cash capex excluding store buybacks, direct store purchases and associated refits. Cash capex differs from Tesco’s APM definition of Capex because it reflects the actual cash paid in the period, irrespective of accruals or deferrals 2. Other includes dividends received in H1 25/26 from IMS and own shares purchased for share schemes
Page 21
21 Return surplus cash to shareholders Consider inorganic growth opportunities Pay a progressive dividend Maintain a solid investment grade balance sheet Reinvest in business and customer offer 5 4 3 2 1 FY 26/27: c.£1.7bn of Capex Net debt/EBITDA c.2.3—2.8x Target a pay-out ratio of c.50% of earnings Including property buybacks where economically viable FY 26/27: £950m inc. additional £200m buyback Our capital allocation framework Clear priorities for capital allocation
Page 22
22 Increasing FY 26/27 Capex and share buyback Now expect c.£1.7bn of FY Capex; includes spend on energy efficiency & distribution transformation1 Disciplined approach, with ROCE well-ahead of WACC as we prioritise high returning projects2,3 Increasing FY 26/27 share buyback to £950m reflecting strong balance sheet and sustained cash delivery WACC 12.1% 11.8% 13.4% 14.6% 14.4% 15.2% FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 H1 26/27 ROCE FY 25/26 WACC 1. Capital expenditure as per Tesco’s APM definition of Capex 2. Return on capital employed (ROCE) uses a rolling 52-week EBITDA and is a Group APM 3. UK FY25/26 pre-tax weighted average cost of capital 300 750 750 750 750 750 250 700 200 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 Share Buyback Additional FY26/27 buyback announced Bank proceeds Share buyback
Page 23
23 FY 26/27 Outlook Group adjusted operating profit between £3.15bn and £3.30bn (previously £3.0bn to £3.3bn) Free cash flow within our £1.5bn to £2.0bn medium-term guidance range
Page 24
24 £1,368m £1,261m £1,298m £1,570m H1 23/24 H1 24/25 H1 25/26 H1 26/27 Free cash flow H1 26/27 timing 11.7 14.5 15.4 17.3 H1 23/24 H1 24/25 H1 25/26 H1 26/27 EPS (p)1 £1,426m £1,649m £1,674m £1,783m H1 23/24 H1 24/25 H1 25/26 H1 26/27 Group adj. op profit £30.4bn £31.5bn £33.1bn £33.8bn H1 23/24 H1 24/25 H1 25/26 H1 26/27 Group salesStrong delivery against our multi-year performance framework 3.6% CAGR 7.7% CAGR 14.0% CAGR Strong cash conversion 1. Adjusted diluted EPS as per the Group’s APM definition. Change shown at actual exchange rates
Page 25
2525 Strategic Update Ken Murphy, Group Chief Executive
Page 26
26 Connected, personalised and loved by customers Winning in food Meeting more everyday customer needs Being the most strategic partner for suppliers Creating a leading food-first retail ecosystem
Page 27
27 Continuing to deliver against our multi-year performance framework Drive top-line growth • Increasing customer satisfaction relative to the market • Growing or at least maintaining our core UK market share Grow absolute profits & maintain sector-leading margins • Leveraging our assets efficiently across all channels • Accessing new revenue streams across our digital platform • Targeting productivity initiatives to at least offset inflation In doing so, generate £1.5bn to £2.0bn free cash flow per year
Page 28
28 28 Our strategy begins and ends with food 28
Page 29
29 Maintained our strong price position versus the market1 Expanded Aldi Price Match to over 2,000 Express stores Around 2.5m customers offered Your Clubcard Prices each week Delivering the best value to customers Winning in food 1. UK Price Index is an internal measure calculated using the retail selling price of each item on a per unit or unit of measure basis. Competitor retail selling prices are collected weekly by a third party. The price index includes price cut promotions and is weighted by sales to reflect customer importance. Now in Tesco Express 29 98 100 102 104 FY 24/25 H1 25/26 FY 25/26 H1 26/27 Full-line grocers Tesco
Page 30
30 Strong innovation across our ranges +6ppts Increase in quality perception over 5 years1, supported by innovation 800+ New and improved products launched in the first half 8.9% Finest sales growth in H1 £3bn+ Annualised Finest sales Winning in food 30 1. BASIS Global Brand Tracker 13 weeks rolling NPS
Page 31
31 Award-winning quality 35 Great Taste 2026 Awards, including 4 three-star Great Taste cheeses 187 Award wins at the IWSC and IWC wine awards, including 7 Gold medals 2026 Free From Awards Retailer of the Year 86 Blas na hÉireann Irish Food award wins Winning in food 31
Page 32
32 The UK’s leading rapid grocery offer No.1 Customer choice for rapid grocery1 Over 2,100 Whoosh locations (up +436); over 75% population coverage +37% Whoosh sales growth in H1 New rapid grocery partnerships, complementing Winning in food 1. Whoosh leading position metrics based on Multi channel tracker for 13 weeks ended 30 August 2026 32
Page 33
33 Scaling online capacity +11% Increase in active customers during the half c.10% More slot capacity added across our estate in the last month 6am Delivery slots now available in our most popular locations Over 2,000 Electric delivery vans in operation, doubled in the last year Winning in food 33
Page 34
34 Making healthy food choices even easier for customers Enhancing nutrient profiles; fibre-enriched bakery lines Simplifying ingredients, inc. new ‘Finest Just X Ingredients’ range Own-brand innovation including high-protein ready meals The most strategic partner for scaling health brands Winning in food
Page 35
35 New website with hundreds of additional styles, more sizes and exclusive online collections Easier for customers to browse, discover and buy our full range On-site video and ‘Shop the look’ functionality Unlocking F&F’s online growth Meeting more everyday customer needs 35
Page 36
36 Barclays’ Cashback Rewards on fuel purchases at Tesco, leveraging our banking partnership Progress in meeting more everyday customer needs Refreshed 201 in-store phone shops1 Over 1,000 sellers now on Marketplace, supported by AI- powered onboarding Meeting more everyday customer needs 10% Clubcard discount on motor insurance through Tesco Insurance 1. Refreshed stores to date
Page 37
37 Tesco Media creates value at every point in the customer journey Strong revenue and profit growth; +17% growth in active advertisers and a further increase in campaigns per advertiser Tesco Media supports across all elements of the customer journey, from creating awareness, prompting the purchase, to building long-term loyalty Leveraging AI to enhance the Tesco Media platform to support scalable, cost-effective growth for suppliers of all sizes Connecting customers with a new favourite: the Poppi launch story At home On the move In store Branded Page Whoosh Sponsorship Scan As You Shop In-Store POS Push Notification Out-of-Store POS Whoosh Bespoke Content In-Store Screens Booker Catering Supply Being the most strategic partner for suppliers
Page 38
38 Further unlocking the power of Clubcard Connected, personalised and loved by customers Nudges to customers to showcase Clubcard benefits Rewards and surprises including Freebie Thursdays Adobe x Tesco Innovation Lab helping us optimise helpful nudges for customers 38
Page 39
39 Refreshing our store network Connected, personalised and loved by customers Helping Tesco to be the preferred store in every community Putting fresh food at the heart of our stores 69 refreshes in the half including Sandhurst, one of our largest UK stores 39
Page 40
40 Investing in digital infrastructure Electronic shelf-edge labels in all UK stores across the next two years as part of Save to Invest Replacing over 40k paper labels in each large store; freeing up colleague hours for customers Other opportunities include smarter replenishment, faster online picking and retail media Long-term business sustainability
Page 41
41 Investing in retail innovation In-house R&D capability through Group Innovation & Tesco Labs teams Retail innovators have direct access to Tesco including through our Red Door programme One of five global grocers behind W23 Global, a $125m fund invested in 13 start-ups Committed £20m as anchor investor in new Bramble Fund, accelerating UK food innovation Long-term business sustainability 41
Page 42
42 Enhancing our long-term resilience AI-powered demand forecasting; key commodity modelling across 20 markets Six Sustainable Farming Groups: premiums offered for meeting higher standards and sustainability objectives Collaborating to improve longer-term resilience on the ground Long-term business sustainability
Page 43
43 Summary Strong financial and strategic progress Customer satisfaction at an all-time high Focused on delivering for customers and creating long-term value for all our stakeholders
Page 44
4545 Appendix 45
Page 45
46 Adjusting items H1 26/27 H1 26/27 H1 25/26 £m £m Amortisation of acquired intangible assets (38) (38) Separation costs related to disposal of Banking operations (25) (13) Restructuring and adjusting property transactions (11) (20) Total adjusting items included within operating profit (74) (71) Net finance income / (costs) 24 (34) Taxation 11 24 Total adjusting items included within profit after tax (39) (81)
Page 46
47 Debt and liquidity Smooth debt maturity profile Less than £1bn maturing in any one year Weighted average maturity of c.6 years Weighted average interest cost of c.4.8% (excluding leases) Strong liquidity position £3.1bn cash1 £2.5bn of undrawn committed facilities Debt maturity profile (£bn) 1. Cash and cash equivalents plus short-term investments less overdrafts 0.00 0.25 0.50 0.75 1.00 Debt Maturities 2026 Issuance
Page 47
48 Guidance FY 26/27 Group profit Adjusted operating profit between £3.15bn and £3.30bn Free cash flow Within our medium-term guidance range of £1.5bn to £2.0bn Capex Invest £1.7bn with continued focus on high-returning projects Net finance costs1 Adjusted net finance costs, which principally comprise lease interest, to be c.£(575)m Tax Effective tax rate to remain around 27% in FY 26/27 Dividend Progressive (broadly c.50% of earnings) Interim dividend 35% of prior year full year dividend, in line with our policy Share buyback Increasing current year share buyback from £750m to £950m, to be completed by April 2027 1. Guidance relates to adjusted net finance costs (including finance charges payable on lease liabilities)
Page 48
Disclaimer Certain statements made in this document are forward -looking statements. For example, statements regarding future financial perf ormance, market trends and our product pipeline are forward -looking statements. Phrases such as "aim", "plan", "intend", “should”, "antic ipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward -looking statements. Forward- looking statements are based on current expectations and assumptions and are subject to a number of known an d unknown risks, uncertainties and other important factors that could cause actual results or events to differ materially from what is expressed or implied by those statements. Many factors may cause actual results, performance or achievements of Tesco to be materially dif ferent from any future results, performance or achievements expressed or implied by the forward looking statements. Important factors that could cause actual results, performance or achievements of Tesco to differ materially from the expectations of Tesco include, among other things , general business and economic conditions globally, industry trends, the outcome of any litigation, competition, changes in government and othe r regulation and policy, including in relation to the environment, health and safety and taxation, labour relations and work stoppages, intere st rates and currency fluctuations, changes in its business strategy, political and economic uncertainty, including as a result of global pandemics . As such, undue reliance should not be placed on forward- looking statements. Any forward -looking statement is based on information available to Tesco as of the date of the statement. All written or oral forward -looking statements attributable to Tesco are qualified by this caution. Other than in accordance with legal and regulatory obligations, Tesco undertakes no obligation to publicly update or revise any forward -looking statement, whether as a result of new information, future events or otherwise. 49