Bullbear Buffett : Tesco, UK

Monday, 23 February 2026

Tesco, UK

Over the last five years, Tesco has demonstrated a strong and resilient business performance, navigating a period of significant economic challenges—from the post-pandemic landscape to severe cost-of-living inflation—to deliver consistent sales growth, recover profitability, and return substantial cash to shareholders . The company's strategy has focused on reinvesting in its core customer offer through value initiatives like Aldi Price Match and Clubcard, which has resulted in growing market share and improved customer satisfaction .

Here is a summary of Tesco's financial performance over the last five fiscal years.

📈 Strong Sales Growth and Market Share Gains

Tesco has consistently grown its top-line sales over the five-year period, from £57.89 billion in 2021 to £69.92 billion in 2025 . This growth has been driven by a successful strategy focused on value and loyalty:

Winning Customer Offer: The combination of "Aldi Price Match," "Low Everyday Prices," and exclusive "Clubcard Prices" has made Tesco highly competitive, helping customers manage the cost-of-living crisis .
Record Market Share: This strategy has paid off significantly. By early 2025, Tesco's UK market share reached 28.3%, its highest level since 2016, with 21 consecutive periods of growth . This momentum continued into the first half of the 2025/26 financial year, with share up a further 77bps to 28.4% .
Volume and Premium Growth: The focus on value has driven volume growth, while innovation in premium ranges like 'Finest' has also been a key contributor, with Finest sales growing by 15% in FY24/25 .

💰 Profitability and Shareholder Returns

After a dip in the 2022/23 fiscal year due to high inflation and impairment charges, profitability has rebounded strongly:

Profit Recovery: Adjusted operating profit fell to £2.63bn in 2022/23 as the company absorbed significant cost inflation to protect customers . However, it rebounded by 11% in 2023/24 to £2.83bn and grew by a further 10.6% in 2024/25 to reach £3.13bn .
Cash Returns to Shareholders: Reflecting confidence in its strong cash flow and balance sheet, Tesco has undertaken an aggressive share buyback programme. Since October 2021, it has bought back £3.7 billion worth of shares as of October 2025 . The dividend per share has also been on the rise, increasing by 13.2% for FY24/25 to 13.70p .

🚀 Strategic Investments and Future Outlook

Tesco is not resting on its laurels and is investing in long-term growth platforms:

Digital and Convenience: The company is expanding its online capabilities, with its 'Whoosh' rapid delivery service now covering over 70% of UK households . It also launched "Tesco Marketplace" to offer third-party general merchandise online .
Personalisation and Media: With Clubcard penetration now over 80% in its markets and 18 million app users, Tesco is building a powerful digital media and insight platform to offer personalised deals and a new revenue stream .
Cautious Optimism: For the 2025/26 financial year, Tesco initially guided for lower profits to allow for further investment in a highly competitive market . However, due to a strong customer response to its investments, it upgraded its profit guidance in October 2025 to between £2.9bn and £3.1bn .

In summary, Tesco has successfully fortified its position as the UK's market leader by doubling down on value and loyalty during a period of economic strain. This has translated into consistent sales growth, a powerful recovery in profits, and significant cash returns for its shareholders.

No comments:

My 18 points guide to Successfully compounding your money in Stocks

Be a good stock picker.
Think as a business owner.
Always look at value rather than the price. Do the homework.
Buy and hold is alright for selected stocks.
Compounding is your friend, get this to work its magic.
Mr. Market is there to be taken advantage of. Do not be the sucker instead. BFS;STS.
Always buy a lot when the price is low.
Never buy when the stock is overpriced.
It is alright to buy when the selected stock is at a fair price.
Phasing in or dollar cost averaging is safe for such stocks during a downtrend, unless the price is still obviously too high.
Do not time the market for such or any stocks.
By keeping to the above strategy, the returns will be delivered through the growth of the company's business.
So, when do you sell the stock? Almost never, as long as the fundamentals remain sound and the future prospects intact.
The downside risk is protected through only buying when the price is low or fairly priced.
Tactical dynamic asset allocation or rebalancing based on valuation can be employed but this sounds easier than is practical, except in extreme market situations.
Sell urgently when the company business fundamental has deteriorated irreversibly.
You may also wish to sell should the growth of the company has obviously slowed and you can reinvest into another company with greater growth potential of similar quality. However, unlike point 16, you can do so leisurely.
In conclusion, a critical key to successful investing is in your stock picking ability.

http://myinvestingnotes.blogspot.com/2012/07/my-18-points-guide-to-successfully.html

11 Lessons From Peter Lynch

Peter Lynch taught me:

1. Behind every stock is a company. Find out what it’s doing.
2. Never invest in any idea you can’t illustrate with a crayon.
3. Over the short term, there may be no correlation between the success of a company’s operations and the success of its stock. Over the long term, there’s a 100% correlation.
4. Buying stocks without studying the companies is the same as playing poker – and never looking at your cards.
5. Time is on your side when you own shares of superior companies.
6. Owning stock is like having children. Don’t get involved with more than you can handle.
7. When the insiders are buying, it’s a good sign.
8. Unless you’re a short seller, it never pays to be pessimistic.
9. A stock market decline is as predictable as a January blizzard in Colorado. If you’re prepared, it can’t hurt you.
10. Everyone has the brainpower to make money in stocks. Not everyone has the stomach.
11. Nobody can predict interest rates, the future direction of the economy, or the stock market. Dismiss all such forecasts and concentrate on what’s actually happening to the companies in which you’ve invested.

Lynch’s advice had a profound effect on my stock market approach. He taught me that investment success isn’t the result of developing the right macro-economic view or deciding when to jump in or out of the market. Success is about researching companies to identify those that are likely to report positive surprises.

Capital Expenditure

A great company with a Durable Competitive Advantage will have a ratio of Capital Expenditures to Net Income of less than 25%. Less is better.

Capital Expenditures are expenses on:
- fixed assets such as equipment, property, or industrial buildings
- fixing problems with an asset
- preparing an asset to be used in business
- restoring property
- starting new businesses

A good company will have a ratio of Capital Expenditures to Net Income of less than 50%.

A great company with a Durable Competitive Advantage will have a ratio of less than 25%.

Less is better.

Benjamin Graham's 113 Wise Words

The true investor scarcely ever is forced to sell his shares, and at all times he is free to disregard the current price quotation. He need pay attention to it and act upon it only to the extent that it suits his book, and no more. Thus the investor who permits himself to be stampeded or unduly worried by unjustified market declines in his holdings is perversely transforming his basic advantage into a basic disadvantage. That man would be better off if his stocks had no market quotation at all, for he would then be spared the mental anguish caused him by other persons' mistakes of judgement."

Philip Fisher's Wise Words

"The refusal to sell at a loss, while completely natural and normal, is probably one of the most dangerous in which we can indulge ourselves in the entire investment process.

More money has probably been lost by investors holding a stock they really did not want until they could 'at least come out even' than from any other single reason. If to these actual losses are added the profits that might have been made through the proper reinvestment of these funds if such reinvestment had been made when the mistake was first realized, the cost of self-indulgence becomes truly tremendous."

(Common Stocks and Uncommon Profits)

The Ultimate Hold-versus-Sell Test

Here is the overriding primary test, followed by observations on why it is so critically important:

Knowing all that you now know and expect about the company and its stock (not what you originally believed or hoped at time of purchase), and assuming that you had available capital, and assuming that it would not cause a portfolio imbalance to do so, would you buy this stock today, at today's price?

No equivocation. Yes or no?

Answers such as maybe or probably are not acceptable since they are ways of dodging the issue. No investor probably buys a stock; they either place an order or do not.

Here is the implication of your answer to that critical test: if you did not answer with a clear affirmative, you should sell; only if you said a strong yes, are you justified to hold.

Some thoughts on Analysing Stocks (KISS)

Ideally a stock you plan to purchase should have all of the following charateristics:

• A rising trend of earnings dividends and book value per share.
• A balance sheet with less debt than other companies in its particular industry.
• A P/E ratio no higher than average.
• A dividend yield that suits your particular needs.
• A below-average dividend pay-out ratio.
• A history of earnings and dividends not pockmarked by erratic ups and downs.
• Companies whose ROE is 15 or better.
• A ratio of price to cash flow (P/CF) that is not too high when compared to other stocks in the same industry.

Margin of Safety Concept: Stocks should be bought like groceries, not like perfume

The high CAGR in the early years of the investing period, due to buying at a discount, tended to decline and approach that of the intrinsic EPS GR of the companies over a longer investment time-frame.

Chapter 20 - “Margin of Safety” as the Central Concept of Investment

A single quote by Graham on page 516 struck me:

Observation over many years has taught us that the chief losses to investors come from the purchase of low-quality securities at times of favorable business conditions.

Basically, Graham is saying that most stock investors lose money because they invest in companies that seem good at a particular point in time, but are lacking the fundamentals of a long-lasting stable company.

This seems obvious on the surface, but it’s actually a great argument for thinking more carefully about your individual stock investments. If most of your losses come from buying companies that seem healthy but really aren’t, isn’t that a profound argument for carefully studying any company you might invest in?

Bullbear Buffett

Monday, 23 February 2026

Tesco, UK

💰 Profitability and Shareholder Returns

🚀 Strategic Investments and Future Outlook

No comments:

All equity security investments present a risk of loss of capital

The Ultimate Hold-versus-Sell Test

Some thoughts on Analysing Stocks (KISS)

Benjamin Graham

Sell the losers, let the winners run.

Investment Style

Warren Buffett

Political and Economic News

Interesting Blogs