Tesco Sales Growth Halves to 1.8% as Middle East Conflict Dents Shopper Confidence; Stock Falls 2.4%

The slowdown is sharp, even if sales are still rising. Tesco’s UK sales growth more than halved in its first quarter, with comparable sales rising 1.8% to £13.4 billion in the three months to the end of May 2026, down from 4.2% in the prior comparable period. The retailer said weaker consumer confidence and higher fuel costs tied to Middle East tensions weighed on growth. Tesco shares fell 2.4% in early trading on June 18, 2026. The UK’s largest grocer is feeling a geopolitical shock translate directly into footfall.

Why Growth Slowed So Sharply

Tesco also faced tough comparatives from last year, when unusually warm and sunny weather boosted food and drink sales across the sector. That base-effect headwind compounded the confidence problem. 

• Booker, Tesco’s wholesale business, saw sales fall 3.2% as independent retailers and catering customers faced challenging high street trading conditions. 
• CEO Ken Murphy said the company remains focused on delivering value, quality, and service as Middle East tensions continue to create uncertainty for consumers.
• Tesco confirmed shopper sentiment has been hit by the Iran war, though the company stated prices have not been directly affected. 

Tesco, Britain's biggest food #retailer, reported a slowdown in underlying UK sales growth in its first quarter, missing analysts' average forecast, saying the conflict in the Middle East was continuing to create uncertainty for consumers.https://t.co/tyh3wJazT5

— European Supermarket Magazine (@esm_magazine) June 18, 2026

What’s Still Working at Tesco

Customer Satisfaction Is Climbing Despite the Slowdown

CEO Ken Murphy said strong customer satisfaction and continued sales growth drove first-quarter progress, highlighting the company’s operational momentum.

Despite the slowdown, Tesco maintained its full-year profit expectations. Before today’s update, analysts had projected average profit of £3.25 billion for the 2026/27 fiscal year. Sales are decelerating, not reversing, and management is treating the conflict as a temporary headwind rather than a structural shift.

The Buyback Program Continues Uninterrupted

Tesco has progressed its £750 million share buyback scheme, purchasing £341 million worth of ordinary shares between 16 April 2026 and 17 June 2026. The remainder of the programme is scheduled to finish by April 2027. 

That continued capital return signals management confidence even as top-line growth softens. Peer UK grocers including Sainsbury’s, Marks & Spencer, and Asda are all facing the same consumer confidence headwind tied to the Middle East conflict and elevated fuel prices.

Final Thoughts

Tesco’s first-quarter update tells a story of resilience inside a slowdown. Sales growth of 1.8% is still positive growth, just at less than half the rate posted a year earlier. With profit guidance unchanged and the buyback program on track, Tesco’s underlying business appears stable even as shopper sentiment absorbs geopolitical shock. The next quarterly update will reveal whether the Middle East conflict’s drag on confidence eases or deepens through the summer.

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