Tesco to respond to price war at ‘testing time’ – Daily Business

Tesco’s share price hit a multi-year high earlier this year, although there has since been a sharp sell-off, thanks to fears that Asda is trying to start a price war in a bid to recapture lost market share, say analysts at AJ Bell.

“Only time will tell whether such worries are legitimate or not, but Tesco has done a good job of defending and taking market share, according to the data produced by consultants Kantar,” they say, adding that any such an attack would come at a potentially testing time, given imminent increases in the bill for wages and also national insurance contributions.

Helped by strong festive trading, chief executive Ken Murphy reiterated that he expected full-year adjusted operating profit from the core retail business of £2.9 billion, with a further £120 million from the banking business on top. The current consensus forecast is £3.075bn for 2025 across the whole group followed by £3.2bn in fiscal 2026

Tesco sold its Edinburgh-based banking business to Barclays in late 2024 for £600 million and said that this cash would be used to fund further share buybacks, where Tesco has already run three programmes in the last three years:

The grocery giant is also expected to push through its second consecutive increase in its annual dividend, to 13.33p a share, up from 12.1p in the year to February 2024. Analysts currently see a further hike to 14.63p a share in the coming year.

JD Sports

JD Sports’ shares have struggled for a while, partly owing to worries about consumer confidence, Nike’s plan to sell more stock directly (potentially to the detriment of key partners like JD) and now down to worries about spending on athleisure and lifestyle gear after the latest dud quarterly updates from both Nike and Lululemon Athletica.

For the year to January 2025, Regis Schultz has already put out two profit warnings, in November and January, thanks to weak trading in the UK and US.

AJ Bell analysts say there is downside risk with like-for-like progress looking flat at best for the whole year and possibly negative in the first quarter.

Analysts are looking for pre-tax profits of between £915m to £935m on an adjusted basis and modest progress to £940m in the year to January 2026.

The five-year plan is to open 200 to 250 stores each year and generate double-digit percentage revenue growth on a trend basis.

DIARY

Monday 7 April

• Trading statement from Ferrexpo
• Halifax UK house price index

Tuesday 8 April

• Full-year results from Hilton Foods and Staffline
• BRC UK retail sales index

Wednesday 9 April

• Full-year results from Saga
• Full-year trading update from JD Sports
• Interest rate decision from the Reserve Bank of New Zealand

Thursday 10 April

• Full-year results from Tesco
• US inflation

Friday 11 April

• UK GDP growth
• UK construction, manufacturing and industrial production
• US producer price inflation
• In the USA, quarterly results from Wells Fargo, Morgan Stanley, BlackRock, Bank of New York Mellon and Fastenal