Tesco Store
STRATEGIC ANALYSIS 2025

Tesco

Market Leadership Through Value,
Innovation & Digital Transformation

£63.6bn Sales
29.4% Market Share
340,000 Colleagues

EXECUTIVE OVERVIEW

Strategic Framework

01

Market Position & Scale

Dominant leadership in UK grocery retail, commanding the highest market share in a decade through strategic investments and operational excellence.

02

Financial Performance 2024/25

Strong growth amid competitive pressures, delivering £3.13bn adjusted operating profit and robust cash generation.

03

Strategic Transformation

Digital innovation and customer-centric initiatives driving loyalty, personalization, and omnichannel excellence across all touchpoints.

04

Competitive Landscape

Navigating intensifying market dynamics with disciplined strategy against discounters and traditional rivals.

Future Outlook

Strategic positioning for continued growth and value creation

£2.8bn
Share buybacks since 2021
Market
CHAPTER ONE

Market Position
& Scale

Dominant leadership in UK grocery retail, achieving highest market share in over a decade

29.4%
Peak Market Share
32
Consecutive Growth Periods

MARKET POSITION

The UK's Undisputed Market Leader

Tesco has achieved its highest market share in over a decade, demonstrating sustained momentum

Market Share Evolution

29.4% Dec 2025

Highest market share since 2016, achieved during the critical Christmas trading period

+31 basis points YoY in four weeks to 28 Dec

Market Leadership Indicators

Consistent Gains
32 consecutive four-week periods of market share growth
Outperforming Market
Grew ahead of market on both value and volume basis

Source: Marketing Week, Kantar Worldpanel

STORE PORTFOLIO

Multi-Format Retail Footprint

Strategic store network catering to diverse shopping missions and customer needs

Store Format Distribution

1,675+
Express Stores
~500
Superstores
~150
Metro/Other

Strategic Expansion Plans

150
New Express Stores
Planned over next 3 years (2025-2028)
2,000+
New Jobs Created
Supporting local communities across the UK
2,224
Target Express Estate
Total convenience locations by 2028

Format Strategy

Express

Convenience-focused locations for quick shopping missions, fuel, and food-to-go. High-frequency customer visits.

Superstores

Large-format destinations for comprehensive weekly shops, featuring extensive range across food, clothing, and general merchandise.

Metro

Urban high-street locations serving city workers and residents with convenience-led assortment.

Investment in Infrastructure

London Gateway DC (2029) New
Aylesford Chilled DC 2025
Robotic Automation Live
Financial
CHAPTER TWO

Financial
Performance
2024/25

Strong growth and resilient profitability amid intensifying competitive pressures

£3.13bn
Operating Profit
+10.9%
YoY Growth

FINANCIAL RESULTS

Revenue & Profitability Growth

Solid performance across key metrics with disciplined cost management and operational efficiency

£63.6bn
Group Sales (ex-fuel)
+4.0%
£3.13bn
Adj. Operating Profit
+10.9%
£2.97bn
Retail Profit
+7.7%

Five-Year Revenue Trajectory

Key Performance Drivers

1
Volume Growth
Strong customer response to value initiatives
2
Category Mix Improvement
Premium ranges and health categories
3
Operational Efficiency
Save to Invest programme delivery

Brand Perception

+195bps
Overall Brand
+282bps
Reputation
+242bps
Value Perception
+153bps
Quality Perception

Source: Tesco PLC Preliminary Results 2024/25

CAPITAL ALLOCATION

Cash Flow & Shareholder Returns

Disciplined capital management balancing investment, debt reduction, and shareholder value

Cash Flow Analysis

Free Cash Flow
Available for allocation
£1.75bn
-15.2% YoY
Capital Expenditure
Store refresh, automation, digital
£1.46bn
+Investment
Net Debt
Strong balance sheet
£9.45bn
-2.4% reduction

Note: Prior year cash flow boosted by higher trade payables amid increased input cost inflation

Shareholder Returns

Dividends Paid £864m
13.2% increase in dividend per share to 13.70p
Share Buybacks £1.0bn
Completed April 2024 commitment
Total Returns £1.86bn
Since October 2021: £2.8bn buybacks

FY 2025/26 Capital Return

£1.45bn
New Share Buyback Program
£750m
Free Cash Flow
£700m
Banking Sale

Source: Tesco PLC Preliminary Results 2024/25

Digital
CHAPTER THREE

Strategic
Transformation

Digital innovation and customer-centric initiatives driving competitive advantage

84%
Clubcard Penetration
37%
Online Market Share

LOYALTY & DATA

Clubcard: The Loyalty Powerhouse

Industry-leading loyalty program driving personalization, retention, and retail media revenue

Scale & Reach

23m
UK Households
16.3m
App Users
UK Household Coverage
80%+

Digital Engagement

App Adoption Rate 71%
Transaction Penetration 84%
Notification Open Rate 98%

Personalization at Scale

289m
Personalised Vouchers Delivered (2024)
To 7.6m customers (avg 38 per customer)
Customer Data Platform
Buying history analyzed for relevance
App-First Approach
Timely notifications drive repeat purchase
Product Interest Targeting
Surface relevant offers, boost brand affinity

Retail Media Platform

9,000+
Campaigns
Growing
Revenue
Targeted
Advertising

DIGITAL TRANSFORMATION

Digital & Omnichannel Excellence

Leading online grocery presence with rapid delivery expansion and marketplace growth

Online Grocery Dominance

11.4%
Digital Sales Growth
37%
Online Market Share
Same-Day Delivery Live
Whoosh Coverage 70% UK
Whoosh Sales Growth +59%

Marketplace Expansion

600,000+
Third-Party Products
Launched Tesco Marketplace
Non-Food Diversification
General merchandise, clothing (F&F)
Clubcard Integration
Leverage loyalty database for expansion

Digital Capabilities

AI Personalization

Enhanced customer experience and recommendations

Retail Media

Growing advertising revenue stream

App Ecosystem

16.3m users with integrated services

Delivery Network

Optimized fulfillment and last-mile

Technology Investment

Estimated $2bn annual ICT spending covering cloud, big data, AI, robotics, and in-store technology

Cloud
AI
Robotics
Data

PRODUCT STRATEGY

Product Innovation & Quality

Continuous innovation across premium and value ranges, supporting market share gains and customer satisfaction

Innovation Pipeline

1,600+
New/Improved Products
Launched in FY 2024/25
Taste Discoveries
"dinner-for-tonight" range
High Protein Range
Health-led innovation
Gut Sense Range
Functional health products

Value Investment

2,300+
Products Price-Reduced
Average reduction: ~9%

Finest: Premium Success

£2.5bn
Annual Sales
+15%
YoY Growth
New Finest Lines 400
Record Festive Sales Christmas
Growth Streak 3 Years

Health & Sustainability

64%
Healthy Food Sales
65%
Target by 2025
Affordable Health
Great value fruit & veg initiatives
Sustainable Choices
Supporting customer transitions
Competition
CHAPTER FOUR

Competitive
Landscape

Navigating intensifying market dynamics with disciplined strategy and operational excellence

29.1%
Market Share
+0.5%
vs. 2024

COMPETITIVE ANALYSIS

Market Dynamics & Competitor Analysis

Tesco maintains leadership amid discounter growth and traditional rival challenges

UK Grocery Market Share (Q3 2025)

Winners & Losers

Tesco: +0.5% share gain
Consistent market leadership
Lidl: +0.6% share gain
Fastest-growing bricks & mortar
Asda: -1.0+ point loss
Historic low of 11.5%

Competitive Positioning

vs. Discounters

Price match initiatives and quality differentiation

vs. Traditional

Market share gains from Sainsbury's, Morrisons

vs. Online

Dominant 37% online share vs. Ocado's 2%

Source: Consumer Edge UK Grocery Market Share Report Q3 2025

SUSTAINABILITY & ESG

Leading Retail Sustainability

Exceeding environmental targets while supporting communities and colleagues

65%
Scope 1&2 Emissions
vs. 60% target
2035
Carbon Neutral
Operations
2050
Net Zero
Full Value Chain

Environmental Achievements

100% Renewable

All UK & ROI operations

UK's Largest Solar PPA

Cleve Hill Solar Park

720 Electric Vans

+150 in FY 2024/25

82% Food Redistribution

118m meals donated

Supply Chain Leadership

Suppliers Committed to Net Zero 70%
Low-Carbon Concept Farms 2
Rail Services (UK) 10

Social Impact

Stronger Starts
5m+ portions of free fruit & veg to school pupils
140,000+ pupils in 400+ schools supported
Colleague Investment
£900m+ in pay increases since April 2022
Hourly rate: £12.64 from August 2025

Governance & Recognition

SBTi Validated
Science-based targets approved
ESG in Remuneration
25% weighting in PSP
First UK Retail SCF
Sustainability-linked supply chain finance
Future
CHAPTER FIVE

Future
Outlook

Strategic positioning for continued growth and sustainable value creation

£2.7-3.0bn
Profit Guidance
£1.45bn
Buyback Program

STRATEGIC OUTLOOK

Outlook & Strategic Priorities

Positioned for continued success with disciplined capital allocation and strategic flexibility

FY 2025/26 Guidance

Adjusted Operating Profit
£2.7-3.0bn
vs. £3.13bn in FY 2024/25
Free Cash Flow
£1.4-1.8bn
Medium-term guidance range

Capital Return

£1.45bn
Share Buyback Program
£750m
Free Cash Flow
£700m
Banking Sale

Strategic Priorities

1
Value Leadership

Committed to best value, competitive pricing, and quality. £500m Save to Invest program.

2
Digital Excellence

Enhancing personalization, online experience, and retail media through AI and data.

3
Store Expansion

150 new Express stores, existing store refresh, and automation for efficiency.

4
Sustainability Leadership

Achieve 2035 carbon neutrality and 2050 net zero with renewable energy.

Market Context

Competitive Intensity

Increased market competition requires strategic flexibility.

Inflationary Headwinds

Cost pressures balanced with customer value.

Tesco
EVERY LITTLE HELPS

Positioned for Sustained
Market Leadership

Tesco's relentless customer focus, combined with market-leading scale, digital innovation, and operational excellence, positions the retailer to maintain its dominant position while delivering sustainable shareholder value in an increasingly competitive market.

29.4%
Peak Market Share
£3.13bn
Operating Profit
23m
Clubcard Households
65%
Emissions Reduced