Worldpanel UK: (June-26) - Soft print for Tesco...taking a leap of faith

Research evidence excerpt

Worldpanel UK: (June-26) - Soft print for Tesco...taking a leap of faith

Update

June 23, 2026 11:37 AM GMT

Morgan Stanley & Co. International plc+MRetailing - Food | Europe Izabel Dobreva

Equity Analyst

Worldpanel UK: (June-26) - Soft Izabel.Dobreva@morganstanley.comLuke Holbrook +44 20 7677-5006

Luke.Holbrook@morganstanley.com +44 20 7425-1882

print for Tesco...taking a leap of

Retailing - Food

Europe

Industry View In-Linefaith

What's new? Overall grocery trends look stable at market level, with ~flattish

volumes y/y, but increased promotional activity, and inflation ~3%. For us, instead

the main focus of this release is Tesco, considering the rare UK LfL miss in last

week's results. Share trends were softer than expected for the second consecutive

release, with 4wk till roll/grocery down -20bp/-30bp y/y respectively. We think a lot

of that will be explained by the tough comps from competitor cyber disruption last

year, while underlying market share trends are likely broadly flat to slightly down.

We would have hoped for a greater share of the spend for Tesco during peak

heatwave/World cup period and our FY27 estimates incorporate ~30bp. That said,

for the full year we think Tesco is still on track to gain ~10-20bps. Given

management's long-standing focus on cash generation and protecting ROIC, we

think Tesco is likely opting to sit out 'empty' market share gains here, given high

levels of promotional activity in the market. While this is the correct mid-term

strategy and we are not concerned re guidance delivery - we still expect profit to

safely land towards the top end - we think it does signal that the market backdrop is

getting tougher and the fight for profitable volumes is intensifying. This may cap

near-term upside.