{"id":70439,"date":"2026-05-22T15:04:14","date_gmt":"2026-05-22T15:04:14","guid":{"rendered":"https:\/\/www.europesays.com\/ch\/70439\/"},"modified":"2026-05-22T15:04:14","modified_gmt":"2026-05-22T15:04:14","slug":"ubs-sees-tesco-building-a-stronger-business-as-market-share-ambitions-rise-2","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ch\/70439\/","title":{"rendered":"UBS sees Tesco building a stronger business as market share ambitions rise"},"content":{"rendered":"<p>    <img fetchpriority=\"high\" decoding=\"async\" src=\"https:\/\/www.europesays.com\/ch\/wp-content\/uploads\/2026\/05\/cdd6efc008afadd6daa9a20b2692e2d9.jpeg\" alt=\"UBS sees Tesco building a stronger business as market share ambitions rise\" loading=\"eager\" height=\"641\" width=\"960\" class=\"yf-lglytj  loaded\"\/> UBS sees Tesco building a stronger business as market share ambitions rise Proactive uses images sourced from Shutterstock      <\/p>\n<p class=\"yf-1fy9kyt\">UBS has reiterated its buy rating on <a href=\"https:\/\/finance.yahoo.com\/quote\/TSCO.l\" data-ylk=\"slk:Tesco PLC (LSE:TSCO);elm:context_link;itc:0;sec:content-canvas\" data-yga=\"{&quot;yLinkElement&quot;:&quot;context_link&quot;,&quot;yModuleName&quot;:&quot;content-canvas&quot;,&quot;yLinkText&quot;:&quot;Tesco PLC (LSE&quot;}\" class=\"link \" rel=\"nofollow noopener\" target=\"_blank\">Tesco PLC (LSE:TSCO)<\/a>\u00a0with a 545p price target after a deep dive into the supermarket group&#8217;s annual report revealed what the broker described as a strong performance in a tough market.<\/p>\n<p class=\"yf-1fy9kyt\">The investment bank said Tesco invested in price, recovered gross margins and delivered efficiencies even as operating expenditure headwinds from a \u00a3228 million increase in national insurance contributions eroded EBIT margin modestly.<\/p>\n<p class=\"yf-1fy9kyt\">Gross margins rose 50 basis points in the year, driven by a decline in inventory losses as a percentage of sales to 2.0%, though this remains above the pre-pandemic level of 1.7%.<\/p>\n<p class=\"yf-1fy9kyt\">Total employee costs jumped nearly 10% to \u00a39.5 billion, largely due to a 37% increase in social security contributions, pushing the employee cost-to-sales ratio up 50 basis points to 12.8%.<\/p>\n<p class=\"yf-1fy9kyt\">However, productivity continued to improve for a seventh consecutive year, with revenue per employee reaching \u00a3300,000, up 5.3%, while UK sales per square foot hit their highest level in eight years, up 26% compared with 2019.<\/p>\n<p class=\"yf-1fy9kyt\">UBS highlighted a significant shift in management incentives, with Tesco introducing market share as a metric in its long-term incentive plan for the first time, carrying a 10% weighting alongside adjusted diluted earnings per share and cumulative retail free cash flow at 37.5% each.<\/p>\n<p class=\"yf-1fy9kyt\">The broker said this pointed to a greater level of ambition in sustainable market share growth, noting that UK market share rose 24 basis points to 28.5%, the highest level since 2015 and a gain of 122 basis points over the past three years.<\/p>\n<p class=\"yf-1fy9kyt\">On the digital side, UBS flagged the rapid scaling of Tesco Marketplace, where weekly traffic has more than doubled and average basket spend has grown approximately 90% since launch.<\/p>\n<p class=\"yf-1fy9kyt\">Online sales rose 11.2% in the year, with online market share up 30 basis points to 35.7%.<\/p>\n<p class=\"yf-1fy9kyt\">The Finest range recorded its third consecutive year of double-digit sales growth, up 15%, while Tesco Media delivered strong growth alongside data analytics partner Dunnhumby, though no figures were disclosed.<\/p>\n<p class=\"yf-1fy9kyt\">UBS said Tesco&#8217;s partnership with Mistral AI to embed artificial intelligence across the business, particularly in Clubcard personalisation, represented a significant long-term opportunity.<\/p>\n<p class=\"yf-1fy9kyt\">The broker&#8217;s DCF-driven price target of 545p implies 17% upside from the current share price of 465p.<\/p>\n","protected":false},"excerpt":{"rendered":"UBS sees Tesco building a stronger business as market share ambitions rise Proactive uses images sourced from Shutterstock&hellip;\n","protected":false},"author":2,"featured_media":70440,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[129],"tags":[7102,1079,8049,9219,4360,223],"class_list":["post-70439","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ubs","tag-basis-points","tag-earnings-per-share","tag-gross-margins","tag-market-share","tag-tesco","tag-ubs"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ch\/116618845684499656","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/70439","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/comments?post=70439"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/posts\/70439\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media\/70440"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/media?parent=70439"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/categories?post=70439"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ch\/wp-json\/wp\/v2\/tags?post=70439"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}