Tesco's UK sales growth slows as Iran war weighs on consumers

Tesco, Britain's largest food retailer, reported a 1.8% rise in UK like-for-like sales, missing analysts' forecasts due to ongoing uncertainty caused by the Middle East conflict.

Tesco, Britain's biggest food retailer, reported a slowdown in ‌underlying UK sales growth in its first quarter, missing analysts' average forecast, saying the conflict in the Middle East was continuing to create uncertainty for consumers.

The group, which has an over 28% share of ‌the British grocery market, did, however, maintain its profit guidance for the full-year. The impact of ‌the Iran war on energy prices, with knock-on effects on consumer spending, is adding to the challenges the UK retail sector and the wider economy face.

Tesco said UK like-for-like sales rose 1.8% in the 13 weeks to May ⁠30 - below ​analysts' consensus forecast ⁠of 2.3% and compared to growth of 3.1% in the previous quarter. The group was up against a tough comparative ⁠performance in the first quarter last year when UK like-for-like sales rose 5.1%, boosted by favourable weather.

"I am ​pleased with our progress in the first quarter, with customer satisfaction up strongly and continued ⁠sales growth building on the exceptional performance we delivered last year," CEO Ken Murphy said. Tesco kept its forecast for adjusted ⁠operating ​profit of £3.0 billion to £3.3 billion ($4.0-$4.4 billion) for its year to end-February 2027, versus the £3.152 billion made in 2025/26.

Analysts were on average forecasting profit of £3.25 billion for 2026/27 ahead of ⁠Thursday's update. Shares in Tesco have increased 15% over the last year.

UK consumers increased their spending ⁠in May after ⁠reducing it in April, but expenditure on travel dropped for a third month in a sign of caution over the economic impact of the ‌Iran war surveys showed ‌last week. ($1 = 0.7517 pounds)