Tesco Stock Down On Weak Pre-tax Profit In FY25, Cautious Outlook

(RTTNews) - Shares of Tesco Plc were losing around 6 percent in the morning trading on the London Stock Exchange, after the British retail major reported Thursday lower pre-tax profit in fiscal year 2025 and issued a cautious outlook for fiscal 2026 adjusted operating profit.

However, net profit in the year climbed from last year with growth in revenues, and the firm lifted dividend and announced 1.45 billion pounds share buyback.

Ken Murphy, Chief Executive, said, "Building on our strong financial performance, robust balance sheet and positive momentum, we are setting ourselves up for the year ahead with the flexibility to continue to win in a highly competitive market. Despite inflationary headwinds, we are committed to ensuring customers get the best possible value by shopping at Tesco, and see further opportunities to strengthen our competitiveness."

Looking ahead, for fiscal 2026, Tesco expects Group adjusted operating profit of between 2.7 billion pounds and 3.0 billion pounds, lower than last year's 3.13 billion pounds, reflecting the current market conditions.

In addition, the company announced a further share buyback totalling 1.45 billion pounds, to be completed by April 2026. The buyback comprises 750 million pounds funded by free cash flow and 700 million pounds funded by the sale of Banking operations.

Tesco also proposed to pay a final dividend of 9.45 pence per ordinary share, up from 8.25 pence last year. The full year dividend would be 13.70 pence per ordinary share, up 13.2 percent year-on-year.

The proposed final dividend is subject to the approval of shareholders at this year's Annual General Meeting. The final dividend will be paid on June 27 to shareholders who are on the register of members at close of business on May 16.

In the year ended February 22, profit before tax fell 3.2 percent to 2.22 billion pounds from last year's 2.29 billion pounds.

On an after-tax basis, profit was 1.63 billion pounds, up 36.7 percent from 1.19 billion pounds a year ago. Earnings per share climbed 42 percent to 23.51 pence from 16.56 pence in the prior year.

The net results reflected the disposal of the Group's Banking operations.

On a continuing operations basis, profit after tax dropped 9.1 percent from last year to 1.60 billion pounds, and earnings per share fell 5.7 percent to 23.13 pence from 24.53 pence in the prior year.

Adjusted earnings per share from continuing operations were 27.38 pence, compared to 23.41 pence a year ago.

Revenue for the year, excluding VAT, including fuel, grew 2.5 percent to 69.92 billion pounds from prior year's 68.19 billion pounds.

Group sales, excluding VAT and fuel, were 63.64 billion pounds, up 3.5 percent from 61.48 billion pounds last year.

Group like-for-like sales went up 3.1 percent, including UK growth of 4.0 percent, ROI growth of 4.6 percent and CE increase of 2.2 percent.

In London, Tesco shares were trading at 314.10 pence, down 6.29 percent.

For more earnings news, earnings calendar, and earnings for stocks, visit rttnews.com.