Tesco results to address inflation risks from Iran war
Tesco reports results next week as the Iran war drives up fuel and food costs. Analysts expect grocery inflation to reach nearly 10% by the end of the year.
TESCO PLC is scheduled to report its full-year financial results next Thursday, providing investors with an assessment of how the conflict in Iran is expected to influence inflationary pressures within the grocery sector. The most immediate impact of the geopolitical tension on household budgets in the United Kingdom has been observed at fuel pumps, where rising petrol and diesel prices have increased motoring costs. Beyond transportation, the agricultural sector is also facing significant challenges. Farmers, struggling with escalating energy and fertilizer expenses, have warned that prices for produce grown in heated greenhouses—including tomatoes, cucumbers, and peppers—are likely to rise starting in April. Clive Black, head of consumer research at Shore Capital, noted the strategic balancing act required by the retailer. > We expect a delicate balance between delivering value to shoppers whilst managing the immediate cost pressures to be a key area of discussion. While grocery inflation in the United Kingdom was recorded at 4.3% in the four weeks ending March 22, the Food and Drink Federation has cautioned that food price increases could reach nearly 10% by December. Supply chain pressures are already becoming evident. MCBRIDE PLC, a manufacturer of private-label cleaning products, has announced price increases for its supermarket clients to cover the energy costs impacting its suppliers. Similarly, PRINCES GROUP PLC has indicated that price adjustments are forthcoming. Tesco, which has seen its shares rise by 47% over the past year, has guided for an adjusted operating profit of approximately 3.1 billion pounds for the year ending February 2026. This figure is expected to remain largely flat compared to the previous year, reflecting intense competition in the domestic market. For the 2026/27 fiscal year, analysts are forecasting a growth in adjusted operating profit to 3.23 billion pounds. Although the company faces a difficult comparison against the first quarter of 2025, when sales rose by 5.1%, analysts suggest Tesco is relatively protected from war-related shifts in discretionary spending, as its non-food business accounts for less than 10% of total group sales.
