LONDON, April 16 (Reuters) - Tesco, Britain's biggest food retailer, said on Thursday uncertainty caused by the conflict in the Middle East meant it was providing a wider range of forward guidance
Britain's Tesco says Iran war clouds profit outlook
Tesco's Profit Forecast and Economic Uncertainty
By James Davey
LONDON, April 16 (Reuters) - Tesco, Britain's biggest food retailer, said on Thursday that uncertainty over the economic impact of the Iran war on consumers was clouding its outlook, and in the worst-case scenario could result in its profit falling this year.
Profit Forecasts and Analyst Expectations
Tesco, which has a 28% share of the UK grocery market, forecast adjusted operating profit of 3.0 billion to 3.3 billion pounds ($4.07 billion to $4.48 billion) for its year to end-February 2027.
That compares with 3.152 billion pounds in 2025/26, which was up 0.6% on the year before and slightly ahead of forecast.
Analysts were on average forecasting profit of 3.23 billion pounds for 2026/27 ahead of Thursday's update.
Impact of the Iran War on Consumer Confidence
"Much will depend upon the duration of the conflict and in particular, the potential implications for UK households and the economy more broadly," Tesco said in a statement.
Bernstein analyst William Woods said Tesco was giving "careful and conservative guidance in the face of the Middle East war and to avoid accusations of profiteering".
Surging fuel prices caused by the war weighed on British consumers last month, dampening household spending as travel plans were shelved, surveys showed on Tuesday.
Supply Chain and Inflation Concerns
Grocery Inflation and Price Stability
UK grocery inflation held at 4.3% in the four weeks to March 22, data from researcher Worldpanel showed.
Tesco's Response to Inflation and Supply Chain Risks
Tesco CEO Ken Murphy told reporters that it had not yet seen any meaningful inflation in grocery prices due to the conflict and "did not recognise" a Food and Drink Federation warning that food prices will be rising by almost 10% by December.
And Tesco had not seen any real changes in customer behaviour so far, said Murphy, who also played down the possibility of a hit to food availability due to a possible shortage of CO2 gas, which is a key input in food production.
"We are not flagging any issues in our supply chain at this point. So none of our growers, suppliers, manufacturers have flagged to us any supply risk, we're not seeing any availability issues," he said, while noting Tesco was working closely with the British government "on all of their scenario plans".
Sales Performance and Strategic Initiatives
Tesco shares rose 3%, extending year-on-year gains to 40%.
Tesco's sales, excluding VAT and fuel, were 66.59 billion pounds in 2025/26, up 4.3%, with UK like-for-like sales up 4.2%.
Tesco is targeting a further 500 million pounds of costs savings this year to help fund investments in its customer offer. It also announced a further 750 million-pound share buyback.
($1 = 0.7364 pounds)
(Reporting by James Davey, Editing by Paul Sandle and Alexander Smith)
