Tesco PLC (TSCO.L) shares rose 1.7% in early London trading on January 6, 2026, buoyed by strong Christmas grocery sales and significant market share growth. The supermarket giant achieved its highest UK market share since March 2015, reaching 28.7%, according to data from Worldpanel by Numerator. This performance offers a positive signal ahead of the company's critical trading update scheduled for January 8.
Industry data revealed that UK grocery sales increased by 3.8% to £13.8 billion in the four weeks ending December 28. Tesco's market share grew by 0.2 percentage points, outperforming peers like J Sainsbury and online grocer Ocado. Analysts view these figures as evidence that Tesco's promotional campaigns and operational strategies successfully attracted shoppers during the high-demand festive period.
Adding to investor confidence, Tesco announced it repurchased 454,043 shares on January 5 under its ongoing £1.45 billion buyback program, paying an average of 440.49 pence per share. Since the program's inception in April 2025, the company has spent £1.43 billion to buy back over 347 million shares. This strategy aims to boost earnings per share (EPS) and is historically welcomed by the market.
However, the landscape presents challenges. While grocery inflation moderated to 4.3% from 4.7%, easing consumer pressure, it also limits revenue growth from price increases. Analysts emphasize that the key focus of the January 8 update will be whether market-share gains have translated into operating profit, not just higher promotional activity. "The market is focused on whether these market-share gains are translating into operating profit, not just higher promotional activity," said Axel Rudolph, senior market analyst at IG.
Investor sentiment remains positive, with a market consensus rating of "Buy" and an average price target of approximately 473.75 GBX. The upcoming statement will determine if Tesco's volume resilience during peak weeks came without excessively eroding margins, especially as food inflation and wage costs pose ongoing challenges for 2026.
