Good morning, everyone, and thank you for joining us this morning following the publication of our first quarter trading update. As usual, I'm here in Welwyn with Imran, and we will shortly open the lines for your questions. We have had a really good start to the year, delivering like-for-like sales growth across all areas of the group. I would like to start the call today by making it clear that this is due to the fantastic work of our colleagues. I want to say a huge thank you to all of them. Our unwavering commitment to delivering value and quality products to our customers, coupled with strong availability and customer service, have once again underpinned another successful quarter. In the U.K., our market share remains strong at 28%, and we have now seen 24 consecutive periods of share growth.
We have consistently achieved switching gains, a reflection of our strong competitive positioning across all tiers of the market. Customer satisfaction has continued to improve, with our brand perception score up by 65 basis points compared to the same time last year. We have seen progress across a broad range of pillars, including quality and value. In this context, our U.K. like-for-like sales grew by 5.1%, with growth in both food and non-food across all channels. Our food sales increased by 5.9%, helped by a strong combination of fresh food and an early start to the summer. Non-food sales, excluding toys, were just as strong, with like-for-like sales up by 6.2%. That includes a particularly good performance in clothing, which benefited from new and extended ranges, and of course, the good weather.
While increased commodity costs and new regulatory burdens are creating inflationary pressure across the industry, we're doing everything we can to help customers get the best value every time they shop at Tesco. In addition to the Aldi Price Match, Low Everyday Prices, and Clubcard Prices, our latest price cut campaigns have driven price reductions on hundreds of the products that matter most to our customers. We've materially increased the amount of personalized offers too. When it comes to value, quality is as important as price. We have continued our focus on improving and innovating across all our ranges. Across the quarter, we launched over 350 new owned brand products. We delivered exciting innovation across our summer ranges, including our Fire Pit and Finest Barbecue Ranges. We've relaunched our Finest Italian Range of prepared meals and pizzas with regionally inspired recipes.
In the quarter, Tesco Finest recorded growth of 18%, as the brand continues to resonate with customers looking for affordable ways to treat themselves. Our dedication to quality was celebrated at the 2025 International Wine Competition, where our wines earned five gold and 35 silver medals, which was more than any other retailer. Online has once again achieved double-digit growth, with market share of our core home grocery shopping business up 1.5 percentage points year on year, as we increased capacity and saw improving customer satisfaction. We've also seen a strong performance from Whoosh, our rapid delivery grocery business, which is now available from over 1,600 stores. At the beginning of May, we launched F&F Online on tesco.com and through our grocery and Clubcard app, providing customers with the opportunity to access our stylish and affordable offering across multiple channels.
This aligns with our strategy to serve customers wherever, whenever, and however they want to be served. Combined with our grocery offerings and the expanding range of products available on Marketplace, F&F Online helps tesco.com meet even more customer needs. In Ireland, we were delighted to see our market share increase once again to 23.3%, delivering 40 consecutive periods of gains. Food like-for-like sales increased by 5.8%, and we were recognized once again for our fantastic quality, with our fresh food ranges receiving 10 Monde Selection Awards. In Ireland, we have continued to deliver growth across all channels, including a contribution from 13 new stores added over the last year. Our online business reported very strong growth as we continued to benefit from the launch of same-day fulfillment options last year.
Booker delivered like-for-like growth of 2%, with core catering and retail more than offsetting the continued decline in the tobacco market and Best Food Logistics. As many of you know, summer is a crucial period for many of Booker's customers. The good weather has helped support trading in the period, with core catering sales up 7.3% and core retail sales up 5.4%. Our Central Europe business has also reported growth across all countries, which was mainly driven by fresh food sales, as customers responded well to our targeted price investments and expanded product ranges. The market remains intensely competitive, and we are committed to ensuring customers get the best value in the market by shopping at Tesco. We are therefore reiterating full-year guidance we gave in April. Thank you all for listening, and I'll now hand back to the operator for questions.
Thank you. Ladies and gentlemen, if you would like to ask a question on today's call, please signal by pressing star one on your telephone keypad. Again, that is star one for your questions today. Up first, we have Izabel Dobreva from Morgan Stanley. Please go ahead.
Hello, good morning. I have three questions. The first one is on pricing. I noticed that the number of promotions being offered through the Clubcard has increased to about 9,000. I think it was about 8,000 before. Could you share a little bit of color here? Is this because we're seeing increased supply of participation and promotional spend, or is it because you're also co-investing or maybe a little bit of both? That was the first question. My second question is on personalized prices. I think you started running a trial from about February. Could you share some initial thoughts from the trial and how you're thinking about the rollout for the rest of the year? Finally, my last question is just on the finest growth, which is up 18%.
Is there a sense that Finest is benefiting from any base effects, just considering the timing of when you started ramping this up, or do you think this is a sustainable level of growth given your share gains? Is the opportunity yet to come?
Morning, Isabel, and thank you so much for the questions. The uptick in Clubcard promotions is really driven by supplier funding. That is an increase in effectively national brands looking to win share back. The personalized prices, it's too early to give you any solid trend data yet. It continues the theme that we've been pushing now for some time, which is we continue to look to get progressively closer to customers and to offer them coupons or nudges or rewards that are tailored specifically to their needs. We keep trialing new and different mechanics in different ways. Generally, I can tell you we're seeing good results from that, but it's too early to call the particular Your Clubcard Prices promotion. On Finest growth, Finest growth really is multifaceted in terms of what's driving its growth. It is a combination of we're going into deeper distribution.
We're getting braver with distribution. We're keeping product innovation on stock for longer. What were historically maybe just seasonal offerings we're seeing has more traction across broader periods of the year. We benefited from the weather, definitely. We saw a lot of participation in our fresh Finest ranges and our fresh prepared and barbecue ranges, etc. Of course, some of our new launches or relaunches have really worked well, like the new Italian range that we've just launched. Our new pizza offering has been really successful. If you haven't tried it, I'd highly recommend it.
Maybe, Isabel, just from a base effect point of view, if I look at the last four quarters of performance on Finest, we had quarter one last year 13, we went to 17, then again 15, and then quarter four at 16%. The 18% comes on top of a very strong base already. To your point, it is actually growth on growth, which is good to see. The other maybe point of color is most of it is volume-led growth, which is good to see.
Thank you very much.
Thanks, Isabel.
Thank you. From UBS, we now host Frida Mahakali with our next question. Please go ahead.
Hi, good morning, team. Thanks for taking my questions. Can I go with three as well, please? Firstly, Ken, I guess noting your point on quality being as important as price, how important is being the cheapest online grocer for sustaining market share to outperformance? Second, maybe you can talk a little bit about inflation. We hear from suppliers that there is more input cost driven, but increases still come. What did you see in Q1? What are your thoughts ahead for the rest of the year? Thirdly, Express was flat last year, but I think in Q1 you're talking about growth in all channels. Can you expand a little bit on convenience in general Express, particularly? Is it still underperforming? If it is, what explains the relative softness in the channels? Thank you.
Thanks, Frida. Great question. I think our observations from the performance we've achieved in quarter one is that the customer is looking for the complete shopping experience. They're absolutely looking for really competitive prices, but they're looking for great quality product at competitive prices. They're looking for an excellent shopping trip. They're looking for easy, convenient ways to shop you. By that, I mean the product's in stock, the shopping environment is good, the digital experience is good, they feel looked after, rewarded, and it's easy. It's an easy and seamless mission. I think our focus on nailing all of those aspects together has underpinned our success. I'm really pleased with our pricing and our competitive position on pricing. We've invested heavily. We've stayed really competitive. When I look at our indices, they haven't moved materially.
We're dialing up all the other aspects of the proposition at the same time, which means that the value for money equation for the customer really works. That's what I would say on the first question.
Should I take one? Should I go on inflation?
Yeah, sure.
On inflation, I mean, if you look at Kantar, what you see is around 3.5%. We've been below that for the quarter, which is good. That helps us, as Ken mentioned, on the price index. I mean, as you've seen the same commodity trends as we have. You see increases in proteins, in some oils, but at the same time, cocoa has stopped to increase and has given us a bit of a decrease as well. You start to see a balanced picture emerging, but there's still certainly upward pressure on some of the key commodity lines as we've started since the beginning of the year. Obviously, as you know, we never give you a forecast on where we see inflation play out.
Look, it's certainly something that we continue to work really hard to offset as much as we can, which explains one of the reasons why the price index is as good as it is.
Yeah. Finally, on Express, I think we've seen clearly growth in Express in quarter one. I think we've seen stronger growth in online. If I then look at relative to the market, Express, Tesco Express is outperforming the market. We are really, really pleased with Express's performance in the market. I think what is also giving us some optimism is clearly the Booker Symbol Group's Premier, particularly, is growing very strongly. You see that from Booker's performance in quarter one as well. I think you've definitely seen a little bit of a rebound in Express and the convenience format. I would say if you were to rank it, you are seeing online growth being the strongest driver of growth, followed by large stores and then by convenience.
If I can very briefly follow up on the price indexes point, having moved materially, does that say competitive situation, while intense as you highlight in the statement, has it remained stable since April when we last talked?
I think that the market is and always has been very competitively intensive. When we called an intensification, a further intensification in April, it was a real intensification, and it remains real. That is the way I would phrase it. I would not say it has stayed the same. I think there has been further investment, but it is relatively rational. That is why you are seeing stability in the indices, but there has been an intensification of investment for sure.
Thank you.
Thank you.
Thank you. Our next question now comes from Rob Joyce from BNP Paribas Exane. Please go ahead.
Hi, morning. Thanks very much. I'll go with three as well. Just firstly, Imran, just to confirm then, food sales just under 6%, inflation below 3.5%. So we're seeing sort of food volumes up 2%-3% in the quarter with the first one. Second one, just trying to understand within that dynamic of the first quarter, is there anything which would make sort of the drop through on the like-for-like sales in terms of profits very different to what we've seen in previous periods? If anything, you could highlight there. The third one, it's just on the U.K. consumer. Just wondering if you're seeing any signs of slowdown maybe in the non-food business, seeing some data on in terms of employment levels starting to fall off quite a bit in May, for example, in terms of payroll employees.
Just wondering if you're seeing any change in the consumer dynamic more recently. Thank you.
Look, on the food volume, as you are right to point out, sales in food grew around 6%, which was really, really strong. Pricing is below the 3%. You are right in the sense of volumes, it is in that 2%-3% line, which is a combination of volume and mix. In terms of drop through to the bottom line, it is nothing different than before. As you know, we have got the inflationary pressures we are dealing with, but safe to invest, we are feeling good on. The drop through is pretty much as anticipated. I think your third question was.
Rob?
UK consumer. Sorry. Yeah, sorry. Anything you're seeing in terms of your non-food or just the other bits of the business in that UK consumer trajectory? How do you see the UK consumer right now?
Yeah, no, look, it's a really good question. I mean, we would have said, I think what we might have said at the year-end was that having been cautiously optimistic, we sensed a kind of a cautious pessimism at the year-end. We probably are looking at it through a little bit of rose-tinted glasses because performance has been so strong for us in both food and non-food, as we just explained. It has been really, really, really good. We do not know how much of that has been driven by the weather because the weather has been great, and how much of that has been driven by the fact that we're just more competitive in all aspects of our offer. We do see a stability in the consumer. I would call out employment as the biggest bellwether for me in terms of that customer sentiment.
I think as long as employment remains strong, I think the consumer will be relatively resilient, at least in our categories. It is the one to watch if I was you.
Thank you very much.
Thank you. From IBC, we now have Manjari there with our next question. Please go ahead.
Thank you. Morning, Ken, Imran. I also had three questions if I may. My first question was just on non-food. I know you called out sort of new and extended ranges in clothing. I was just wondering if you could give any color on how much more work you think there is to do on the non-food offer, how much more should we expect in terms of range innovation, any sort of timeline you can put on that. Secondly, on Central Europe, I was just wondering if you could give any color on how you're looking at margin evolution and return to profitability for that region now. Finally, just on Marketplace, I wondered if you could give any color on any learnings from that so far. I appreciate the F&F launch is fairly recent, but for the wider offering, any key takeaways from that offer?
Thank you.
Thanks, Manjari. By the way, it's not compulsory to ask three questions. Let me start on home and clothing. We've done an enormous amount of work on our non-food offer over the last five years, starting with kind of exiting all of the what we said were non-core categories that we didn't think we could deliver a point of difference on. We shrunk the headline sales number but improved the profitability of that business. In the meantime, we've consolidated home and clothing under the F&F brand. We've upgraded the range materially, and we remain fantastic value. I believe we're at a very exciting inflection point in home and clothing. We've hired an outstanding leader in Katia who's joined us to lead the business and taking over from the fantastic work that Jan did.
I feel really good about where we are right now on home and clothing, and I think we have a lot of runway to go. We mentioned, of course, that we launched F&F Online. I think I said on the media call that 80% of clothing decisions are made first by visiting a website. Therefore, we think that this will massively upweight the visibility of our range to customers and also showcase our full range because you can only get our full range of clothing in a limited number of stores. I am excited about that. In terms of Central Europe, look, we are seeing a stability in the Central European business in terms of their market share and their overall performance. They have not been helped by the weather in the first quarter. They have had relatively poor water, sorry, weather.
That said, they've delivered growth in the first quarter, so we're pleased with that. I think that clearly you need to look at what's going on in each country. We're in an election year in Hungary, so you always have to watch out for regulation in the market. Overall, I'm pleased with the stability and the performance of the Central European business. Lastly, and it's early days for us on Marketplace, it's something that we're investing a lot of time and energy in. We're building slowly and progressively, learning as we go, and we'll continue to do so.
Great. Thank you.
Thank you.
Thank you. Our next question now comes from William Woods from Bernstein. Please go ahead.
Hi, good morning. Thanks for taking the questions. I've got three as well. The first one's on price. Have you seen any change in the dynamics or the mechanisms of the price investments that have gone through throughout kind of Q1? Is it still kind of focused on those branded SKUs rather than maybe the core Aldi Price Match range? The second one's in terms of Booker. I suppose you mentioned the performance of Premier. Do you think we've turned a corner in Booker? What's driven that? Why is Best Food still weak within that? The final question is just on the management changes that you've had recently, obviously kind of losing Matt Barnes, and you've created the new group strategy role. Is there any color that you can give on the changes that you've made?
I suppose, why have you now decided to create a board-level strategy role? Thanks.
Okay. Let me start on the management changes question. I will actually hand over to Imran to talk pricing and maybe Booker as well. On the management changes, clearly, Matthew explained to us that he wanted to move on and gave his reasons. We were, A, first of all, very grateful for the time he spent with us. The business has performed very well under his tenure. I am equally pleased that we have two excellent candidates in Ashwin and Natasha who have taken on the UK CEO role and, as you said, the strategy and transformation role. Both of them are outstanding executives. They have been on the executive committee for a number of years and have been massive contributors to the success of the business.
I feel really, really positive that these changes will actually accelerate the performance of the business and accelerate our strategic ambitions. That's all I'd say. I mean, we would wish Matthew the very, very best of luck in his future career. At that note, I'll hand over to Imran.
All right. Let me take Booker first. Look, we're really happy with the Booker performance for the first quarter. As you do know, of course, the core retail and the core catering businesses over the last two years have demonstrated growth every quarter, which is a good thing. I think we saw stronger growth even this quarter. I think that's nice to see because obviously that market isn't the easiest one to grow in and certainly win in, but it tells us that we're getting market share and doing the right things for customers, be it on availability, quality, and certainly on range as well. I think that feels good. I would say probably the weather is not unhelpful, especially if you think about eating out in pubs and so forth.
I think that's been sort of a good performance in both catering and on the retail front. Look, as it comes to Best Foods Logistics, you'll have noticed there was only a slight decline versus last year, which is a good thing. The key reminder on Best Foods Logistics is it's not a significant profit driver within Booker. As you know, it's fairly fixed in terms of how much we make there. Even if it is in slight decline, the profit is actually fairly protected that way. The way to think about it is the end consumption of our customers that use Best Foods Logistics, the quick commerce, sorry, the quick food customers, for example, have slower demand. Obviously, we therefore need less logistic services. That's the main driver there.
In terms of the outlook for Booker, I would say the main goal for us is to continue to see growth in the core retail and the core catering businesses as we have seen over the last two years consistently, and that does not change. Your question on price dynamics, look, I think you have seen a step up in Clubcard Prices that demonstrates the % promoted is around 32% or so on volume. That is a notch up from prior year, but not by much. You do see that. I think arguably it is no bad thing when you are also dealing with inflation to make sure customers get to leverage good prices. In terms of where and what, it is fairly consistent, no big changes.
I mean, as you will also know, April and May have seen a bit of an inching up as suppliers have passed on the NIC and payroll increases they've dealt with. You also see an increase in promotion.
Excellent. Thank you very much.
Thanks, Will.
Thank you. We are now moving on to a question from Freddy Wild from Jefferies. Please go ahead.
Good morning, Ken, Imran, and team. Thank you for taking my questions. You'll be glad to hear I've only got two. The first is, can I understand whether there's been any material change in trading in recent weeks, particularly as the good weather has stopped? I'm both thinking sort of within the U.K., has maybe those final sales stepped down a little, or alternatively in Europe, has the return of good weather there maybe helped things on a little bit? The second question is just on from Rob's question about margin flow-through. Obviously, you say you've got like-for-likes, which are going to be that volume growth flowing through to margin delivery in half one. You've got more supplier funding. You've got potentially more targeted promotions in general. I mean, can we at this stage exclude the possibility that you can deliver flat margins in the U.K. in half one?
Thank you.
Thanks, Freddie. I mean, let me answer the second question first. I'll start and then I'll pass to Imran to maybe give a more comprehensive answer. I think that, yes, we are seeing an uptick in supplier funding, but as you can see, that's flowing straight through to the customer in terms of our competitive offers and the number of offers we're putting in front of customers. I think it's, in my book, too early to say what the half-year margin outlook looks like. Clearly, it's helpful that we're trading strongly and beating the market, and we have every intention of maintaining our momentum. Imran, as you're.
Yeah, look, I mean, good attempt, Freddie, in terms of getting more color on profits. So good try. But look, what I would say to you is, at this stage, and it's with nine months to go for the full year, the guidance we set out was very clear, right? We 2.7-3 with the intent to use the flexibility and firepower if we need it to respond. It's been a good start to the year, but with nine months to go, I want to see how it all plays out, how competitively the reactions are. So far, so good, but I would say the key point for you to take is nine months to go means we need to play it through.
The only thing I would comment on more than what Ken has already said is that ranges is where I see us, and I feel comfortable with where we are on that front.
Yeah. In terms of trading, Freddie, I think that the trading patterns have definitely been boosted by the weather in the first quarter. In the second quarter, as you've seen a kind of a downturn in weather conditions on a year-on-year basis, you definitely see a dip. In the last week, we've seen weather returning to kind of more normalized year-on-year patterns, so trading's picked back up again. Weather plays its part, but it tends to even out over time.
Perfect. Thank you very much.
Thank you.
Thank you. Up next, we have Clive Black from Shore Capital Markets. Please go ahead.
Thank you, Morgan, gentlemen, and very well done on Q1. I'll try and keep it simple and go back to the old days and do one question. In terms of the environment you're in today, you now understand NIC, living wage, and all the other headwinds around the cost base. I just wondered, could you give us more color as to what levers and buttons you're actually pressing now around, say, to invest, to protect your margin, and create the room to remain competitive at the shelf edge? Thank you.
Sense of, I mean, the headwinds we're facing are not small, and we had mentioned the $235 million on NIC and then also the wage increases as well. It is a fairly sizable bill. At the same time, we feel very positive about our ability to have set at least $500 million of those. Look, the levers we are pushing are pretty much the ones that we had mentioned over the last year as well. It is a reduction of in-store logistics, efficiencies, a reduction on freight costs. We leverage our shared services more. We are looking at procurement on services purchasing in terms of contracts that are up. At the same time, we are looking at waste reduction opportunities and, frankly, warehouse automation as well where we can. I look at it as an end-to-end program.
It's more about making sure that anything that can be simplified is simplified. Anything that can be optimized is truly optimized. We want to protect hours in store because I think one of the reasons we've done really well is because we bring a fantastic service to our customers, and we want to protect that. It is more around the other areas, Clive. So far, so good.
Sorry, just the magnitude of the uplift in labor costs you've seen, does that change the basis of your thinking around the mechanisms you apply to try and reduce costs? If you didn't have that magnitude of cost increase, would you be maybe thinking differently?
The way to think about it is, as labor costs go up, of course, the returns you get on automating where you can, for example, in the warehouse project I mentioned, they become more attractive. Clearly, you do look at those opportunities. I would say the most important principle, Clive, for us is how do we make the business offset its own OpEx increases to make sure we protect the pricing to our customers and at the same time not touch the experience that customers have with us. Certainly, automation, leveraging AI tools more often, leveraging our shared services centers does make it more appealing.
Done. Thank you for the question. The answer even. Thank you.
Thanks, Clive.
Thank you. From Barclays, we now have Karine Elias with our next question. Please go ahead.
Hi, good afternoon. On the strong Q1 results, I had two questions if possible. Your market share continues to grow, and I would have expected it to probably be against tough comps. Is the market share gained still broad-based or obviously with finance doing better? Are you perhaps gaining more market share from particular competitors that you were not expecting to initially? My second question was more on the environment. Obviously, you mentioned the intense competitive environment, but still called it, I would say, rational. Some of your competitors had announced pricing action earlier this year. Were those in line with what you have expected or perhaps a little bit less aggressive? Thank you.
Thanks so much, Karine. I think, first of all, our share gains over the period are fairly broad-based in terms of where we're winning share from. It continues to be a consequence of, again, a strategy of investing across all aspects of the shopping trip and all tiers of the offer. We're appealing to as broad a range of customers as possible. That's really helping kind of where we're taking share from. That said, we definitely start to lap very strong share gains in the next few months. That will get harder. Notwithstanding that, we have great momentum, and it's momentum we're planning on keeping. If I look at the environment and the competitive environment, I think we're getting largely what we expected, definitely not less, but probably not more either. As you can see, we've responded pretty strongly.
That's, again, been something that's underpinned our momentum.
That's great. Thank you.
Thank you. Our final question for today comes from Monique Pollard from Citi. Please go ahead.
Morning. Thank you for taking my questions. Three, if I can. The first was, obviously, Imran, you've been very clear. You want to give yourself at this stage flexibility and firepower to invest. Just wondering if you're expecting to see a step up in price competition around key events. Given Ken's comment that the consumer remains, let's say, a bit under pressure, but you do see them spend at key events and weather, etc. Just wondering if moments like back to school, you're expecting to be increasingly competitive. The second question I have was just on the online launch of SNS. Very clear the rationale for it, but just wondered why now? Is it just that with Marketplace, etc., the infrastructure is there now and that's why?
Was it you taking a view on competition heating up from other competitors and their clothing lines in particular and the refocus on those? The final question, I appreciate non-food is a very small part of your business, but just in terms of the general merchandise, wondering if there's anything you're seeing on factory gate pricing, particularly out of China, you could flag. Thank you.
Thanks very much, Monique. The last question, first, no, we're not seeing anything through factory gate pricing on general merchandise unusually. Pricing remains pretty stable. As I said, we're really pleased with performance on that. In terms of the F&F launch online, you're absolutely right. It's the Marketplace infrastructure that's allowed us to launch our clothing business online. It's been really helpful in that. As I said, I think earlier, it's a critical, I think, component of being successful in today's clothing industry because so much of the shopping mission starts online. I'll hand to Imran for the first question around price competition.
Yeah, look, on key events, you're absolutely right. I mean, whether it's Easter or Mother's Day or back to school or Christmas, we absolutely expect that all of our competitors will continue to dial up their intensity, and we're certainly going to make sure that we do the same.
Thank you.
Thanks, Monique.
Thank you. With that, I'd like to hand the call back over to you, Ken, for any additional or closing remarks.
Thanks so much, Saskia. Thanks, everyone, for joining. We really appreciate the time and all the great questions. We are particularly pleased to be able to talk to you on a day where we've had such a strong quarter. I think it has been the product of investment that's been right across the shopping trip, and clearly, customers are responding well. Our commitment is to maintain that momentum, to continuously really work hard on value, quality, and the experience while investing in the strategic growth drivers that we talk to you about from time to time. We look forward to seeing you all again at the half year and updating you on our performance. Thank you and have a great summer.