Tesco Says Iran War Is Clouding Outlook for UK Shoppers

A Tesco Plc supermarket in Barkingside. Photographer: Chris Ratcliffe/Bloomberg Photo by Chris Ratcliffe /BloombergArticle content(Bloomberg) — Tesco Plc said the war in the Middle East is creating uncertainty for shoppers that risks weighing on Britain’s biggest supermarket as the ripple effects of the conflict play out. Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentThe retailer expects adjusted operating profit of between £3 billion ($4.1 billion) and £3.3 billion this year, according to a statement Thursday, a wider range than it had anticipated due to the war in Iran. Its profit rose to £3.15 billion in the 12 months ended Feb. 28, ahead of analyst expectations.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle content“We don’t know what it’s going to look like because clearly this is a very volatile, unpredictable situation,” Chief Executive Officer Ken Murphy told reporters, adding Tesco is focused on keeping prices down and that excluding fuel, it is not seeing inflation. “This scenario seems to change literally by the hour depending on the latest social media posts from the American President.”Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentUnder Murphy, Tesco has cemented its market lead by ramping up the number of products it price matches to discounter Aldi, and by expanding the number of offers under its Clubcard loyalty program. The strategy has proved effective and Tesco’s market share in Britain hit 28.7% in the 12 weeks to Dec. 28, according to data from Worldpanel by Numerator. It now stands at 28%.Article contentInvestors pushed Tesco’s shares 20% higher in 2025, and 6.8% so far this year through Wednesday’s close. They rose as much as 3.5% in London on Thursday, as analysts focused on the retailer’s strong underlying performance.Article contentTesco delivered “sound execution and sensible guidance,” JPMorgan analyst Borja Olcese said in a note, adding it has a record of outperforming its forecast.Article contentArticle contentStill, Tesco’s statement underscores how the Middle East conflict has the potential to weigh on growth, amid warnings about UK households’ ability to absorb higher prices. The Food and Drink Federation now expects food inflation to exceed 9% by the end of the year, up from its previous forecast of 3.2%.Article contentThe grocer’s last financial year ended as the war in Iran began, so the effect on supply chains has yet to show up in its figures. UK retailers have predicted it will take some months before the full impact is clear.Article content‘Cautious’Article content“The cautious outlook reflects greater consumer uncertainty and higher inflation following the Iran war,” Bloomberg Intelligence analyst Charles Allen said in a note. “Tesco is making clear it will defend its hard-won low-price position rather than push to widen margins.”Article contentFashion and homeware company Next Plc warned last month that higher freight and energy costs triggered by the conflict would add £15 million ($20.3 million) of costs in the short-term, and that it would start to pass on costs to consumers if the conflict lasts more than three months.Trending Trump isolation deepens on world stage as allies rebuff, condemn PMN Business The Great Correction: Not even Wayne Gretzky's hometown could escape the crash of the 'exurbs' Real Estate Posthaste: What Mark Carney's gas tax cut could mean for the Bank of Canada News What is Anthropic's Mythos AI model and why does it have the financial world in a panic? Innovation Forcing people to pay a moral tax if they leave the country won't inspire them to stay Personal Finance Article contentChancellor of the Exchequer Rachel Reeves met supermarket bosses — including Murphy — this month to discuss how to ease the impact of any cost inflation from the conflict on prices at the till. Ministers have expressed frustration about the US decision to go to war and its knock-on impact on Britain.Article contentThe UK economy was expanding quickly prior to the conflict, official data published on Thursday showed. But the mood has changed, with economists warning that Britain is more exposed than any other major advanced economy, as disruption to energy supply lines leaves households worse off.Article content“Much will depend upon the duration of the conflict and in particular the potential implications for UK households and the economy,” Murphy said.Article content(Updates with CEO’s comment in third paragraph, economic data in final.)Article contentShare this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. 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