Tesco increases buyback to £950m as first-half profits rise

What was released

Tesco increased its current-year share-buyback programme to £950m from £750m in interim results released on 8 October. It reported first-half adjusted operating profit of £1.783bn, up 6.5% at actual exchange rates, and an interim dividend of 5.05p per share, up 5.2%.

The supermarket now expects full-year adjusted operating profit of £3.15bn to £3.30bn, compared with the previous £3.0bn to £3.3bn range. The lower end has risen; the upper end is unchanged. This remains guidance rather than a completed full-year result.

First-half free cash flow was £1.570bn. Tesco identifies an approximately £250m payroll-timing benefit that will unwind in the second half. It continues to forecast full-year free cash flow of £1.5bn to £2.0bn.

Tesco: interim results for 2026/27, released 8 October 2026.

The Apolifina view

Analysis

A buyback uses company cash to purchase shares. It is not a £950m cash dividend shared between existing investors, nor does it guarantee that the share price will rise. Its effect depends partly on the prices paid and the business’s subsequent performance.

For shareholders comparing the result with other retailers, adjusted profit, statutory earnings and free cash flow answer different questions. The temporary cash-flow benefit makes a simple doubling of the first-half number particularly unhelpful.

The useful follow-up is whether underlying trading continues to support both investment in the business and distributions. A higher dividend alone does not establish whether the shares are attractively priced.

What remains uncertain

The second half has not yet been reported. Customer demand, costs and the timing of cash movements can change the eventual outcome. The company forecast is not a promise of shareholder returns.

Continue reading: Stocks and Shares ISAs explained · Choosing an investment platform