UK SUPERMARKET chain Tesco said on Thursday that its profit outlook could be affected by the war in West Asia, as higher food costs add pressure. The company reported higher earnings for its last financial year.
Tesco said adjusted operating profit for 2026/27 could be lower compared with the 12 months to the end of February.
The company expects the figure to be between £3 billion and £3.3 billion, after it rose slightly to £3.15 billion in the 12 months to the end of February.
"Reflecting the increased uncertainty caused by the conflict in West Asia, we are providing a wider range of guidance than we were previously planning," the company said in its earnings statement.
"Much will depend upon the duration of the conflict and, in particular, the potential implications for UK households and the economy more broadly."
Tesco chief executive Ken Murphy said the company is "committed to doing whatever we can to help keep down the cost of the weekly shop".
The group said profit after tax rose nearly 10 per cent to £1.79 billion in its 2025/26 financial year. Revenue increased 5.4 per cent to £73.7 billion.
Kristalina Georgieva, head of the International Monetary Fund, on Wednesday warned of difficult conditions for the global economy if the war in West Asia continues and oil prices remain high.
"We are concerned about risks for inflation moving into food prices should the delivery of fertilisers at a reasonable price (not be) restarted soon," Georgieva told reporters during the International Monetary Fund and World Bank's spring meetings in Washington.
Aarin Chiekrie, equity analyst at Hargreaves Lansdown, said Tesco is "in a better position than most of the competition when it comes to weathering these headwinds."
"Its enormous scale and strong relationships with suppliers are its key tools in keeping prices down for customers, giving them little reason to look elsewhere," he noted following the earnings update.
Tesco's share price rose 2.5 per cent in morning trading on London's benchmark FTSE 100 index, which was up 0.2 per cent overall.
Tags: Tesco, West Asia war, UK economy, food prices, global inflation
