Tesco Stock

Good morning, everyone, and welcome. I'm here in Welwyn with Imran to share an update on our performance as well as the progress we have made in delivering against our strategic ambitions.

I'm pleased with our performance across the half. Customers are at the heart of everything we do, so I'm proud that we've achieved our highest ever customer satisfaction score, reflecting our continued investment in value, quality and service. Alongside this, we have delivered a strong financial performance and made progress against our strategic ambitions, enabling us to continue investing in the customer offer and in the capabilities that will drive our future growth.

Of course, none of this will be possible without the dedication of our colleagues and suppliers. And I'd like to thank them for their continued commitment and support. Their hard work and enthusiasm make a real difference for customers every day.

By investing consistently in the things that matter most to customers, we've delivered significant improvements in the customer satisfaction over the last 5 years, including a further step forward over the last 6 months to achieve our highest ever customer satisfaction score. These improvements have been broad-based with meaningful gains across every measure of customer satisfaction from ease and quality to value and reward.

Alongside record customer satisfaction, there have been a number of other highlights across our first 6 months. We continue to innovate at pace, launching more than 800 new and improved products during the half, including broadening ranges that make healthier choices even easier for our customers. We're making good progress on personalization, extending your Clubcard prices to around 2.5 million customers with plans to expand it further in the second half.

We have also begun rolling out our new AI-powered Meal Planner to customers following a successful trial with colleagues. Whoosh is now the U.K.'s #1 choice for rapid grocery delivery. And we are building on that position with new partnerships with Uber Eats and Deliveroo, helping us reach even more customers. We've also launched our new F&F website, helping even more customers discover and shop our full range of clothing.

Our colleagues are our greatest strength and central to the progress we've made over the last 5 years. We've always believed that if we invest in our colleagues, they'll deliver a better experience for customers. And that's exactly what we're seeing. During the half, we invested more than GBP 200 million in U.K. store colleague pay, including a 5.1% increase in hourly pay. We have also provided greater flexibility, offering our U.K. store colleagues the opportunity to pick up shifts across different Tesco stores in their local community.

At the same time, we've continued to invest in capability and service. 200,000 colleagues have now completed our Most Helpful Shopping Trip training program. This represents our biggest investment in colleague training in more than 5 years. We are proud that Tesco has always played an important role in helping young people take their first step into the world of work. Through the BRC's Opening Shift scheme, we're providing 5,000 new work experience placements for the 18- to 24-year-olds, helping them build skills and confidence for the future.

We remain focused on delivering for all our stakeholders, balancing the needs of customers, colleagues, suppliers, communities, the planet and, of course, shareholders. Our strong and long-standing relationships with suppliers were once again recognized with Tesco voted #1 in the Advantage supplier survey for the 11th consecutive year.

Supporting communities remains an important part of our purpose. And during the half, we doubled the reach of our Free Fruit & Veg for Schools program, helping even more children access healthy food. We've also introduced 6 new and updated sustainability commitments, focused on reducing our environmental impact and strengthening the long-term resilience of the business.

And for our shareholders, as a result of the strong performance of the business, we have continued to deliver attractive returns through both our dividend and share buyback program. I will return shortly with a fuller update on our strategic progress. But first, let me hand you over to Imran to take you through our financial performance.

Thank you, Ken, and good morning, everyone. I'm really pleased with our financial performance in the first half, which builds on the track record we have established over the last 5 years. We delivered sales, profit, cash and earnings per share growth well in line with our performance framework while investing in our business and creating attractive returns for shareholders.

Group sales grew by 1.6% at constant rates, building on the strong performance we delivered last year. Profits grew by a particularly pleasing 6.3% at constant rates with another strong delivery from Save to Invest helping to fund investment in the customer offer and offset our operating cost inflation. Our profit performance was also supported by an increasing contribution from newer income streams, including Tesco Media and Whoosh.

Free cash flow of GBP 1.57 billion reflects a similarly strong underlying performance to the first half last year, plus a net benefit of around GBP 250 million, primarily due to payroll timing. Our balance sheet remains very strong with our net debt ratio at 2x. Alongside sustained strong cash generation, this is allowing us to invest for future growth while continuing to return capital to shareholders. I'm pleased to say we once again delivered double-digit earnings per share growth at 12.2% for the half.

We have proposed an interim dividend of 5.05p per ordinary share, in line with our policy of setting the interim dividend at 35% of the prior year total dividend. Breaking down our performance in detail, all segments delivered profit growth ahead of sales, supported by strong Save to Invest delivery.

In the U.K., sales grew by 2.1% with like-for-like sales up 1.5% and 2-year like-for-like growth of 6.4%. Our food like-for-like sales increased by 2.4%, with Tesco Finest delivering another excellent performance, growing 9% during the half and extending its track record of strong growth. Large stores performed well against a demanding prior year comparison. Tesco Express sales were broadly flat year-on-year, supported by the contribution from new space. Total convenience like-for-like sales, which includes our One Stop stores, declined by 1.7%, largely reflecting the continued decline in the tobacco market.

Online remains a key contributor to U.K. growth with like-for-like sales up 8.4%, supported by improvements to the customer proposition and strong demand across both Grocery Home Shopping and Whoosh. Our market-leading Grocery Home Shopping business continued to strengthen its position, gaining a further 16 basis points of market share with orders up 4.9% and the number of Delivery Saver subscribers increasing by a further 6.1%. Whoosh also continued its strong momentum with sales increasing by 37%, driven by growth in both orders and average basket size.

Turning now to market share. Across the last 4 years, we have increased our U.K. market share by 113 basis points to 27.8%, demonstrating the strength of our offer and the investments we've made in value, quality and service. As anticipated, the change we have seen in the period as measured by Worldpanel reflects the exceptional level of share gains delivered in the prior year, which was supported in part by disruption at some of our competitors. On a 2-year basis, market share grew by 23 basis points. The latest 4-week Nielsen market share read, which includes rapid delivery, does reflect share gains of 14 basis points.

In Ireland, we delivered another strong performance with total sales growth of 6.7% at constant rates and like-for-like sales growth of 4.1%. Growth was driven by continued volume gains, helping us increase market share by a further 44 basis points to 24.1%. Food like-for-like sales increased by 4.4%, supported by strong growth across both fresh and packaged. Tesco Finest also delivered an exceptional performance, growing 12.8% during the half as customers continue to respond well to the quality and innovation within the range.

We delivered like-for-like sales and volume growth across all our channels. Large stores and convenience delivered a strong performance with sales growth of 3.3% and 3.1%, respectively. We continue to invest in future growth through our store opening program, opening 9 new stores in the last 12 months, including 4 large stores. Online remained a key growth driver with sales increasing 11.9%, reflecting the strength of our proposition and continued expansion of our digital reach. During the half, we increased our fleet capacity, while Whoosh continued to scale following its launch last year and now operates from 47 stores, contributing 1.9 percentage points to total online growth.

Booker continued to make good underlying progress in the half. Excluding tobacco, the year-on-year performance largely reflects last year's contract exit in core retail and lapping the strong base in catering. On a 2-year basis and excluding tobacco, like-for-like sales were up 2.7% with growth across all parts of the business. In retail, our symbol brands continue to perform strongly, supported by the addition of a further 275 net new retail partners, and we were particularly pleased to see Londis recognized as Symbol Retailer of the Year at the Grocer Awards.

In a tough market for our catering customers, we've strengthened our core proposition to ensure we continue to offer outstanding value on key essentials. For example, we've added new products, higher quality and clearer tiering across our fresh chicken range and enhanced our coffee and sweet treat lines. Best Food Logistics grew sales in the half, supported by a new contract win.

In Central Europe, sales grew by 1.1% at constant rates, including like-for-like sales growth of 0.4%. Growth was volume-led with food volumes performing particularly well in the half, while Tesco Finest continued its strong momentum with sales increasing by 19.1% year-on-year. By channel, online continued to perform strongly with sales up 19.2%. This was supported by the expansion of our dot-com operations to a further 17 stores, increasing population coverage to now 85%. Store performance was broadly stable with large stores and convenience broadly flat during the period. We also invested in future growth, opening 6 new stores in the half, including 3 large stores.

Turning now to profit. At a group level, we delivered adjusted operating profits of GBP 1.783 billion, up 6.5% at actual rates. In the U.K. and Ireland, profit growth reflects sales growth and strong Save to Invest delivery, helping to fund our targeted investments in the customer offer and offset operating cost inflation. It also benefited from growth in newer income streams such as Tesco Media and Whoosh. Against a strong comparative, Booker profits benefited from better buying and strong delivery of our Save to Invest program. Central Europe operating profit grew strongly, supported by a more effective promotional mix, improved nonfood performance and once again, a strong contribution from Save to Invest.

With operating profits growing ahead of sales across all regions, our group operating margin expanded 13 basis points to 4.8% in the half. Save to Invest remains a key enabler in helping us offset the impact of cost inflation while continuing to invest in customers, colleagues and the business. We continue to make strong progress, and we are on track to deliver our GBP 500 million target for the full year, bringing us to more than GBP 2.7 billion of cumulative savings over the last 5 years since launching the program.

During this half, savings have come from a wide range of initiatives, including further optimization of online picking and the increasing use of AI-enabled processes to improve replenishment, availability and store productivity. We are also seeing an increasing contribution from newer income streams, including Tesco Media and Whoosh. These income streams are complementary to our core food business, leveraging our existing asset base to deliver strong sales growth and highly attractive returns. Together, they represent an attractive source of long-term earnings growth and value creation.

The strong growth in adjusted operating profit flowed through to adjusted profit after tax, which increased by 6.8% during the period, supported by well-controlled finance costs and a stable adjusted effective tax rate of 26.8%. Statutory profit after tax rose 11.8%, reflecting a lower level of adjusting items during the period. I'm pleased to say that we once again delivered double-digit earnings per share growth at 12.2% for the half, reflecting the combination of strong operational delivery and disciplined capital allocation. Just over half of the increase was driven by higher adjusted operating profit after tax, with the remainder reflecting the benefit from our ongoing share buyback program as well as the full year effect of the return of bank disposal proceeds last year.

I'm also really pleased to confirm another strong period of cash delivery with profit growth and disciplined working capital management, offsetting a planned increase in CapEx. Free cash flow of GBP 1.57 billion reflects a similarly strong underlying performance to the first half last year, plus a net benefit of around GBP 250 million, primarily due to payroll timing, which unwinds in the second half.

Our capital allocation framework remains unchanged and continues to guide how we create long-term value for shareholders. We continue to see attractive opportunities to invest in the business while maintaining strong financial returns with our return on capital employed remaining significantly ahead of our cost of capital. Reflecting the strength of our investment pipeline, we now expect capital expenditure of around GBP 1.7 billion this year, up from our previous guidance of around GBP 1.6 billion and around GBP 200 million higher than last year.

The additional investment will be directed towards high-returning projects with a particular focus on productivity and growth initiatives. This includes further investment in energy efficiency and capabilities that will help sustain our Save to Invest program and support long-term profitable growth. In addition, supported by the strength of our balance sheet and sustained strong cash generation, we're increasing our share buyback program for the current year by GBP 200 million from GBP 750 million to GBP 950 million.

Our strong financial performance positions us well as we go into the second half, supporting our ongoing investment in the customer offer and the capabilities that will drive future growth. We now expect group adjusted operating profits of between GBP 3.15 billion and GBP 3.3 billion for the full year, narrowing to the upper half of our previous range. We continue to expect free cash flow to be within our medium-term guidance range of GBP 1.5 billion to GBP 2 billion.

In summary, I'm really pleased with our strong financial performance, which extends our track record of growing sales, profit, cash and EPS in line with our performance framework. This strong performance enables us to keep investing in our customer offer and the capabilities that will drive future growth. I will now hand back to Ken, who will take you through our strategic progress in more detail.

Thank you, Imran. In April, we announced an evolution of our strategic ambitions with 5 goals designed around a single belief. The best way to create long-term value for all our stakeholders is by serving customers better than anyone else. Our food-first retail ecosystem gives us a unique platform to do exactly that. Through our leading store network, online grocery business, rapid delivery proposition and Booker wholesale operation, our core food business allows us to serve customers wherever, whenever and however they choose to shop.

The frequency we build through food creates opportunities to help customers with even more of their everyday needs from F&F clothing and Tesco Pharmacy to Tesco Mobile, insurance and marketplace. In doing so, we make Tesco even more useful and relevant to customers' lives. The deep relationships we build through Clubcard, including through meeting those newer needs, enable us to deliver customers a more personalized, more relevant and more helpful experience that responds to their changing needs.

Tesco Media and dunnhumby help create additional value by connecting suppliers with customers more effectively, contributing to our goal of being the most strategic supplier partner. All of this is underpinned by a truly long-term approach through innovation, deep supply chain expertise and a relentless drive to make Tesco as efficient and sustainable a business as possible.

The result is a virtuous circle. Frequency and breadth help drive deeper customer relationships. Deeper relationships drive better insight, better insight helps drive a stronger offer and a stronger offer helps us attract more customers and invest further in value, quality and innovation. We're confident that delivering against these strategic ambitions and driving this virtuous circle will allow us to continue delivering against the framework we set out 5 years ago. That means growing sales and profits and continuing to deliver strong, sustainable free cash flow long into the future.

Our strategy begins and ends with winning in food. As the U.K.'s leading food retailer, we have a unique opportunity to make a positive difference. Every week, millions of customers shop with Tesco, supported by more than 300,000 colleagues and a supply chain that includes thousands of British farmers and food producers. Delicious, affordable and nutritious food matters more than ever to our customers. And our ability to provide this at the very best price underpins our whole business.

We're proud to have maintained our strong price position relative to the market, ending the half with more than 700 products in Aldi Price Match, more than 10,000 Clubcard prices every week and everyday low prices across a wide range of daily essentials. During the period, we expanded Aldi Price Match to more than 2,000 Express stores, meaning customers have access to great value however they choose to shop with us. We've also rolled out your Clubcard prices to around 2.5 million customers, providing more personalized savings on the products they love while helping them discover new favorites.

Value means more than just price. Customers are increasingly recognizing the investments we've made in quality, innovation and product development, reflected in a 6 percentage point improvement in quality perception over the last 5 years, including further progress during the half. We also launched more than 800 new and improved products across our ranges, giving customers even more choice and reasons to shop with Tesco.

And Finest once again performed strongly, supported by new and refreshed ranges, including our new Finest smoked salmon range and a major relaunch of Finest Bakery. Finest sales grew by 9% in the half, and we expect full year sales of well over GBP 3 billion. The quality of our products continues to be recognized externally too, and that's something we're very proud of. Earlier this year, we won 35 Great Taste Awards, including 4 prestigious 3-star awards for our cheeses. Our wines also received 7 gold medals, including recognition at the International Wine Challenge, and we were once again named Free From Retailer of the Year. These awards reflect the passion and expertise of our colleagues and suppliers and the quality we're delivering for customers every day.

Our customer reach remains unrivaled in the U.K. with the country's largest store network and a leading position in online grocery. We are now the U.K.'s #1 choice for rapid grocery with Whoosh leading the market for customer satisfaction. We extended this service to more than 2,000 stores during the period, adding over 400 locations. This has helped Whoosh sales grow by nearly 40% higher in the half, and Whoosh is on track to deliver sales in excess of GBP 0.5 billion this year. We recently extended our rapid grocery reach following new partnerships with Uber Eats and Deliveroo, allowing us to reach even more customers.

Our long established grocery home shopping business continues to grow strongly. And during the half, we saw 11% growth in active customers. To meet growing demand, we recently increased slot capacity across our U.K. store estate by around 10%. In our most popular locations, we now offer deliveries from 6:00 a.m., giving customers greater flexibility around their daily routines. And we're doing this sustainably with more than 2,000 electric delivery vans now in operation.

Customers increasingly want food that supports their health goals, and we're working hard to make these choices easier. We enriched the fiber content of 65 of our bakery lines, and we are simplifying ingredients across our product ranges to remove additives wherever we can. We are also continuing to innovate to serve emerging and growing health trends, such as nutrient dense and high-protein product ranges. At the same time, we're using our scale, customer insight and reach to help growing brands connect with more customers, such as HIDE, which offers a range of high protein and nutritionally balanced meals and snacks.

Our second ambition is to meet more of our customers' everyday needs. And F&F is a great example of this opportunity. We launched a new fashion-first F&F website, making it easier for customers to browse, discover and buy our fantastic clothing ranges. Features such as on-site video and shop the look bring our ranges to life, while online-only exclusive ranges and more sizes give customers access to the full breadth of our clothing offering in one place.

The frequency and trust we earn through food allows us to serve a much wider range of everyday needs, and we're continuing to enhance the value we offer customers. For instance, during the period, we further strengthened our insurance proposition with Clubcard customers now receiving a 10% discount on Tesco Motor insurance, helping us reward loyalty while providing customers with even greater value. As part of our partnership with Barclays, their customers can now use cashback rewards on fuel purchases at Tesco, an extra way in which we are leveraging the relationship.

We're continuing to invest in our store estate for Tesco Mobile, refreshing over 200 in-store phone shops, bringing an enhanced range of products and award-winning customer service to our 6 million mobile customers. And Tesco Marketplace now has more than 1,000 sellers, helped by faster and easier AI-enabled onboarding, which is supporting our ambition to offer customers an even wider range of products.

Our third ambition is to be the most strategic partner for our suppliers. And Tesco Media enabled by our in-house data analytics business dunnhumby is a key part of that. Tesco Media helps brands connect with customers at every stage of the shopping journey, whether it's at home, on the move or in store. By bringing together our media capabilities, customer insight and store network, we can help suppliers build awareness, prompt purchase and create long-term loyalty.

We are increasingly using automation and AI to make these capabilities more scalable and cost effective for suppliers of all sizes. A great example of this in action is Poppi, a low-sugar soda that launched exclusively in the U.K. at Tesco. We use the full breadth of Tesco Media to connect customers with the brand wherever they were shopping, successfully building awareness and driving sales across all channels.

Our fourth ambition is to be connected, personalized and loved by customers. Clubcard is the glue that holds our whole ecosystem together. And we've made it even more rewarding and engaging through initiatives such as Freebie Thursdays, Clubcard missions and competitions, giving customers even more reasons to shop with Tesco. We're continuing to enhance the Tesco app, making it easier for customers to access the full range of Clubcard benefits and move seamlessly between shopping in-store and online. Through the new Adobe and Tesco Innovation Lab, we're also using technology to deliver more relevant and personalized experiences, helping customers find the right products, offers and services at the right moment.

The vast majority of customers connect with Tesco via their local store, and we are continuing to invest to make Tesco the preferred store in every community. Central to that is putting fresh food at the heart of our stores, creating a more inspiring shopping experience that brings the quality, value and innovation of our food offer to life. We completed almost 70 store refreshes in the first half with our recently refurbished Sandhurst store providing a great example of what we're delivering. As one of our larger U.K. locations, it now features an enhanced fresh market, expanded health and wellness ranges and a redesigned F&F department that better showcases the breadth and quality of our latest collections.

Our fifth ambition is long-term business sustainability, continually strengthening the resilience, efficiency and sustainability of Tesco. We're continuing to build the capabilities that will help sustain our Save to Invest program over the long term while also improving the customer experience. One example is the rollout of electronic shelf-edge labels across all our U.K. large format and Express stores. In a typical large store, this will replace more than 40,000 paper labels while removing thousands of manual tasks each week, improving price accuracy and reducing paper waste. This will also free up colleagues to spend more time with customers. Over time, we see opportunities to use this technology to help us serve customers even better through smarter replenishment, more efficient fulfillment of online orders and new in-store retail media opportunities.

The retail landscape is changing rapidly, and innovation is critical to maintaining our competitive advantage. We do this in several ways. Through Tesco Labs, we develop, test and scale new propositions, technologies and customer experiences, while programs such as Red Door help us connect with entrepreneurs and emerging innovators from outside the business. W23, the innovation partnership we formed with Ahold, Shoprite, Sobeys and Woolworths has already invested in 13 innovative start-ups focused on areas, including AI, automation and sustainability.

And just 2 weeks ago, we announced a GBP 20 million commitment as the anchor investor in Bramble, a new U.K.-based fund focused on innovations that make food healthier, more sustainable and more affordable. As part of our partnership with Bramble, we will be able to help identify, test and scale innovations that can deliver real benefits for customers, suppliers and the wider food system.

Supply chain resilience is central to managing risk and securing long-term access to quality products at the best possible prices for our customers. We continue to invest in AI-powered demand forecasting and commodity modeling, helping us respond more effectively to changes in supply and demand. We are also deepening partnerships across our supply chain, including through our 6 sustainable farming groups. We recently launched the new long-term agreements and sustainability-linked incentives for members of our sustainable beef group, rewarding farmers for delivering higher standards and progress against sustainability objectives.

Through our Tesco Nature program, we are partnering with a number of suppliers and organizations, including citrus producers in Spain to tackle challenges such as soil erosion and water management, helping to strengthen the resilience of future food production. While we're encouraged by the progress being made, building a truly resilient food systems requires collective action. Continued collaboration between producers, retailers, governments and others across the supply chain will be essential to addressing the long-term challenges facing agriculture and food production.

In summary, with a strong financial position, clear momentum behind each of our strategic ambitions and record customer satisfaction, we are well positioned for the second half and beyond. We remain focused on putting customers first, delivering our strategic ambitions and in doing so, creating long-term value for all our stakeholders. Thank you for your time today, and Imran and I would now be delighted to take your questions.

[Operator Instructions] We will now take our first question from Manjari Dhar at RBC.

I just had 3, if I may. My first question is on the narrowed guidance range. I was just wondering if you could give some color on how you view the H1 performance versus what you thought you might be able to do at the start of the year. I'm just trying to get a sense of how much of that narrowed range is informed by the performance to date and how much is because that bottom end was predicated on a scenario for a worsening consumer that didn't really occur.

My second question is on Whoosh. I wondered if you could give some more color on how you see the runway for growth from that business? Like where can it get to? And any color on what you're looking for that partnership with Uber Eats and Deliveroo to bring? And then my final question is just on marketplace. I wondered if you could give us some color on sort of learnings so far for that and any KPIs that you're watching for?

Thanks so much, Manjari. Why don't we do them in reverse order? I'll take the marketplace and Whoosh questions, and I'll pass to Imran to talk you through guidance and how we got on. So I'd start off by saying that marketplace for us has been a kind of journey of getting all the right sellers on the site. So we've up now nearly 80% year-on-year to 1,000 sellers on the marketplace. We've chosen to lead out with Home and Clothing as where we want to kind of make our first statement and the replatforming of the F&F website to be a fashion-friendly or fashion-first website has been a big success with customers.

We've seen a big jump in traffic through that website as a consequence. And we've seen some great results in terms we're winning share in fashion in our grocery sector. So we're really pleased with the kind of early initiatives from a marketplace perspective. But there's a lot more to come to that because I'll move on now on to a second, your second question, which is this year really has been the quick commerce year from an investment in marketing point of view. And we've seen fantastic performance as a consequence.

We've grown Whoosh by 40% in the half, which is compounding on a similar rate of growth last year. So we're well on track to make it more than GBP 0.5 billion sales contributor for the full year. And over the summer, we became the leading quick commerce player before we went on to the other quick commerce platforms. The strategic objective of our partnership with both Uber Eats and Deliveroo is really to reach new customers and expose the Tesco ecosystem to a much wider range of customers beyond our kind of current borders.

And we've seen really great early results from that perspective. So we've seen much lower cannibalization rates than we had expected in the business case from the early growth rates through both Uber Eats and Deliveroo. So really positive signs. And it's a great contributor to the overall ecosystem because it's a high frequency, high kind of urgency mission and seen by many customers as a bit of a lifesaver, it has a very positive effect from an NPS perspective as we've seen from the record customer satisfaction score we achieved at the half year.

And we see plenty of runway, Manjari, for that in the future, particularly as we expose more and more large stores to the Whoosh network, which, of course, has the capacity for 5x the range and is driving basket growth in Whoosh. So with that, I'll pass over to Imran for the guidance question.

Sure. So look, I'll break it down for you just to reflect the nature of your question, first half, second half. So fair to say, when I look at the first half, I am actually really, really pleased about the profit growth that we pushed through the business. And if I look at what are the building blocks, it's fair to say that it's quite broad-based, right? So first and foremost, we had really positive sales mix as in product mix in terms of what we sold. Finest is a good call out there, growing faster. That was really helpful.

Save to Invest, we've talked about it a lot, and it came through exactly like we planned, evenly paced throughout the year, but again, GBP 250 million or so. The new income streams, specifically calling out media and Whoosh worth calling out because they were real contributors to the profit growth. And what that also helped us then to do, the sum of those 3 things helped us to offset fairly strong operating cost inflation as well as the fact that we were able to truly invest for customers. And it is really pleasing to say that we were able to grow profits and be the cheapest full-line grocer in the country, which is really, really important.

Look, fair to say the first half played out better than we anticipated when we set out guidance back in April. And back then, that was the beginning of sort of the Iran conflict, as you well know, and we talked about the resilience of the customer, and we need to understand what environment the customer is in. It is fair to say that in this first half, consumers have been resilient. As we look ahead into the second half, we have 6 months to go. We've got a new budget coming up. We've got Christmas. People's energy bills are going up. So what we want to do is we want to set ourselves up as we always do, to make sure we are set up to win, and we have the flexibility to invest wherever we see opportunities. So that's how we think about sort of the full year guidance and also sort of the split 1 versus 2 halves.

We'll now go to our next question from -- this will be from Izabel, and she's from Morgan Stanley.

I'm very interested in this comment that you make that the latest 4-week Nielsen market share is up 15 basis points, including the rapid delivery. So this suggests that the take-up has been incredibly strong. And if I look at your market share in instant grocery, it's less than half your overall market share in online grocery. So is it fair to conclude that a lot of the growth coming through these third-party partnerships should be incremental? And if anything, you probably have scope to double your market share here in the instant segment? And then I have a second question, but I'll pause here.

So yes, the short answer is that is you're spot on.

Okay. Great. And then my second question is slightly longer term around AI and the launch of Muse, which is dominating market discussions at the moment. How are you adapting your retail media proposition and the marketplace rollout for the AI age? And how do you think about any risks to the retail media income as discovery migrates to AI agents? I think if you can give us a sense of the unique features you have in your retail media proposition, that would be helpful.

Fantastic, Izabel. We're really happy to do that. I think it's very early days for Muse. Clearly, it's a big shift in the AI kind of story. But the jury is out yet, of course, in terms of what impact it will have. But you're right to call out that it requires the industry to think differently about the customer journey and about retail media. I'd start off by saying that one of the positive features about a lot of our retail media income is that it is based on our physical store estate. So we earn quite a lot of media through our store experience and our store journey.

The second thing I would say is that our unique kind of aspect of our retail media is that we have deep insight into customer habits and tendencies. And therefore, we can build very targeted audiences for potential advertisers. And therefore, we can give them a very economic and high-returning retail media proposition. The third thing I'd say is also uniquely, we can measure that, the impact of that media spend because we can see the actual purchases that the consumer makes. And so we can go follow right through from cause and effect.

I think that our adaptations are as follows. The first is that we are partnering with Adobe ourselves to build AI-enabled targeting, and also to build AI-enabled media content creation to allow us to be much more dynamic and responsive and increasingly personalized to the kind of things that work for individual or clusters of customers. And we think that will allow us to provide a more nuanced and targeted media proposition versus the very big tech platforms. But look, I think you're learning about Muse roughly at the same pace as we are. And so I think in 6 months' time, we could have a different answer for you because it's a constantly evolving story.

We'll now take our next question from Matt Clements at Barclays.

I was just thinking about promotional participation in the first half of the year. We saw participation pick up. But can you give us a sense of the market rate in the first half? Are we seeing participation kind of offset by perhaps more targeted promotions kind of driving down the promotion? That would be the first question. And the second question would be around your potential incremental investments in the second half in response to consumers when you change consumers or that's a backdrop. Where do you think those investments would most likely be focused? Where are you seeing the highest returns on investments? So is it price, labor, store hours or marketing?

Can you take that one, Imran?

Sure. I mean, look, I mean, as you know, on the promo side, you're right to say that if you look over this, the first 6 months, the promo percentage has gone up a bit, maybe 3 points or so from where it was last year like-for-like. So from that angle, you can see that a lot of that is driven also by the brand, to be fair, because, as you know, there is a desire to want to go back and get volumes from their part. And I think that's a good thing. That's, and you see that reflected in our Clubcard prices, and I think they're effective. And I think by having been more targeted and leveraging our capabilities on personalization, leveraging our capabilities on the Clubcard prices, it actually is working well for us, and we're pleased with how that's working.

Then in terms of investments into the second half, look, I mean, as you would have seen, I think one key takeout for me is ending the half as the cheapest full-line grocer. I think price and value, of course, is always going to be important for us, and that will continue to play in importance into the second half, but equally making sure that the helpfulness training that we've implemented that Ken spoke about earlier in the presentation and that the hours are there during Christmas, it's worked wonders for us the last 5, 6 years. So we're going to continue to do that.

I see all of those activities that help customers shop better, enjoy themselves, really sort of trust Tesco as the right types of investments. And you could see that by the record sort of customer satisfaction scores, that 33 NPS number for us has been brilliant and has been sort of a North Star for us throughout the year, and we're quite proud of that.

We'll now take our next question from Clive Black at Shore Capital.

If I could ask about inflation, please. I mean clearly, in the spring, we had an energy shock. And I know there's lots of moving parts to inflation. But are you surprised how low some of the measures of food inflation in the U.K. have been in the last 6 months? And in that respect, are you protecting shoppers from the reality of inflation at the moment? And then I guess just the final point is a lot of inflation, particularly around oil or energy is hedge related. Should we be concerned that you, your supply chain and the shoppers could be facing into more elevated inflation if things stay as they are over the next, say, 6 months?

I would start by saying that when inflation was touted to rise significantly back in April, we were uniquely stood out by saying we didn't see it. And the reason we didn't see it is because the Middle East doesn't produce a lot of food. So it was a very, very different scenario to Ukraine where it's a massive food producer and had a massive effect on commodity prices in general. And that's kind of played out because what you saw is, yes, you have seen the energy costs tick up. And you're absolutely right, we and a lot of the industry are now well hedged, having learned the lessons from Ukraine.

But also you saw commodity prices falling in a number of incidences through the summer. And it would be also fair to say that the market is as competitively intense as ever. So there is a picking up of volume on deal, et cetera. So I think all of those factors combined to keep a lid on inflation in the first half. If we look forward, we would never give you an inflation prediction, Clive. I think that our hedging strategy goes beyond the short term. So it's not like it runs out in 2 or 3 months. And we can't really comment on how we see inflation, although we have every intent of doing all of the things we did in the first half to provide the best possible value for customers, particularly going into Christmas. And as we sit here today, we have a great offer. It's very competitively priced. We've bought up in terms of volume. So we're quite, let's say, optimistic and ambitious for Christmas this year.

So sorry, Ken, just to be clear then on my middle point, we shouldn't be anticipating for the foreseeable future that you're going to have to absorb on behalf of your customers an inordinate amount of inflation that you haven't experienced in the first half.

You can never legislate for the competitive dynamics, Clive. But I think we would say that the market has behaved pretty rationally over the last number of years. And the industry has had to navigate a series of crises, but it's a very competitive market, and therefore, you can never take anything for granted. And that's why the phenomenal work that Imran has done on the Save to Invest program has really given us the space and the capacity to continue to win with customers, invest in the long-term strategy and deliver the strong financial results that you saw at the half year.

Yes. And I think if I can build on that, the fact that, as Ken said, we were one of the very few who called out, look, we don't really see the big spike that people are calling out when we spoke in April and then again in June. I think what it does also do, Clive, is it forces you to set the business up for how do you win in a low inflation market, cost management and everything else. And that has actually been quite helpful, and I continue to think that way even into the second half.

We'll now go to our next question from Sreedhar Mahamkali from UBS.

Jump back to guidance, please, for a moment. I think I note, Ken, I think you mentioned you're well positioned for the second half. But I think at the current rate of first half delivery, even at the top end of the guidance range, it implies less than 3% profit growth in the second half. I think I understood, Imran, you were talking about uncertainties in the market, which I fully agree with, budget not the least and Christmas to come, et cetera. But you also mentioned a couple of times being the cheapest full-line grocer.

So the question in my mind is, are the external uncertainties is what you're keeping in mind when it comes to the sort of guidance range being unchanged at the top end? Or are you signaling a greater willingness to step up pace of customer investment in the second half and hence, we should sort of be a bit more thoughtful about it being the cheapest full-line grocer point that you made? I had a couple of other follow-ups.

Yes, sure. So let me maybe take that one. When I say the cheapest full-line grocery, it comes on the back of the first half having made the investments we made, and you saw that we're able to grow profits nevertheless. And that tells you we're also rational players, right? As I look at the second half, that's not going to change in my mind. But what does matter for me is that we continue to look for opportunities to invest where we can win. And I think that is the way we've been operating, well, last 6 years, and I think we'll continue to do so because it works well for us, and it's something we're going to plan to continue to do.

Then you're absolutely right, the uncertainty of the environment that we're operating in, customers have been resilient so far. We now need to see how are they going to be in the second half. And I want to make sure we have the agility, the flexibility to react when needed. But we're always going to be rational, but we'll also look for opportunities to make sure we do the right thing by them. And therefore, when you look at the range, look, we also need to remember, I don't operate the first half, second half, I operate for the full year and how do you win for the full year.

Very fair. Very fair. Second one, I think, Ken, you mentioned very limited cannibalization of Whoosh on demand on the like-for-likes. But I think convenience store like-for-likes seem to tell a slightly different story unless you say there is something else going on within the convenience business. But more importantly, can you give us a sense on the profitability of the online, on-demand business, rather, sorry, and how happy you are with it relative to store margins?

Yes. We're pleased with the profitability of the online business, Sreedhar. The economics work for us. We set that up from the outset. Notwithstanding the fact that it allows us to maintain a healthy improved price position versus the aggregators on Whoosh, it is still a profit contribution business. So we're very pleased with it.

And the cannibalization, is it lessening your point or.

Well, our cannibalization is calculated basically on a sense of would we lose sales from the, first and foremost, will we lose sales from our Whoosh business into the aggregators. And that we haven't seen or we've seen at a much more limited rate than we actually planned in the forecast.

Last one is the buyback is now GBP 950 million, but you're clearly calling it out for just this year. I guess the question is you don't do things in sort of half measures. This isn't something not fully thought through and there is a possibility it remains at that elevated rate into next year and beyond should cash flows remain supportive. Is that a reasonable sort of way of thinking about it?

I like the way you phrased that. But let me address that question. I know what you were doing there. It was clever. But let me try to answer it. There are 2 things. One is just on convenience, clearly, for you to remember, we gained share in convenience. And if you look at the driver of the slight decline, also we need to think about tobacco sales as being a contributing factor there, which you might need to think about.

When you think about the buyback, look, the way to think about the buyback and the step-up this year is it is a sign of confidence in the sustained cash flow generation over the past years, including this first half and the confidence that we have into the second half. Equally, when you look at the strength of the balance sheet, where the leverage ratio is versus the target that we have, we're in a really good place with that.

The fact that we're able to invest into CapEx, into the business, first and foremost, gives you then also that confidence that, first and foremost, you're investing for customer, you're investing for the business, investing for future growth. And then we have the remainder into the buyback. Look, every April, the Board gets together and makes that call, what are the plans for the year that we're about to kick off. And therefore, that's where it gets decided. So I treat every year as a new start, and we'll keep you informed in April when we meet.

We'll now take our next question from Rob Joyce at BNP Paribas.

That's kind of building what you said earlier, but U.K. margin is up, strong profit growth, but U.K. volume is probably flat and like-for-like kind of lowest it's been in 5 years. I guess are we saying this is a new Tesco where your profit growth is now a bit more detached from that volume and top line growth? Or are we looking at that second half guidance and saying, well, maybe there's a tacit thing here. We need to put a bit more into price to reignite the top line. That will be the first one.

Second one is linked to that is, I guess the buyback is interesting as well, just the timing of it. It feels like you're talking more to sustainable cash flow generation. But I'm just guess what's changed in that first half in terms of your view on sustainable cash generation versus the full year back in April? And then the final one more of a broader industry question, but I mean, we've seen some press recently about yourselves and interested in potentially Majestic Wines, the Sainsbury's, Morrisons headlines. I mean, do you feel the U.K. grocery market looks ripe for further consolidation right now? And what kind of role do you see Tesco playing in that?

Thanks very much, Rob. I'll start off with the consolidation question. We believe that the market is probably one of the most competitively intensive in, certainly in Europe, perhaps in the world in terms of the number of players with over 5% market share in the industry. And so that means that you have to be exceptionally sharp to win in this market. And our strategy is designed to continue to win almost irrespective of what happens from a consolidation point of view. Our ambition is to make sure we're the go-to destination for customers for food and winning in food is absolutely central to the strategy.

We believe that the high-frequency nature of that mission gives us permission to talk to them about other missions. And that through kind of digital footprint that we're building alongside the physical footprint and the work we're doing on Clubcard and personalization will provide that kind of ecosystem infrastructure that will allow us to increasingly win share of wallet. Now from a consolidation point of view, there are all sorts of permutations and combinations you can look at, Rob, but we don't spend too much time dwelling on those because they're largely hypothetical.

And they don't change our strategy or our direction of travel as a business. And in fact, we believe that if we stay focused and deliver on that strategy, then we can win. From an M&A or consolidation point of view, as we execute against the strategy, we ask ourselves the question, are there acquisitions that can accelerate the strategy? And if we acquire them, are they good for Tesco customers?

And if they satisfy both those questions, we look at it. And that's the way we think about any future potential M&A or consolidation in the industry is how does it make effectively the boat go faster rather than as a compensator or some sort of defensive play, we're very much thinking about M&A from an offensive strategic context, and that's the way we plan to continue to do so.

In terms of kind of U.K. margin performance, I would go back to the strategy and say winning in food is absolutely critical for us. And so we had a relatively stronger rate of food sales growth than the overall like-for-like, and we continue to invest in that food proposition as a core engine of the company. But you're right to say that as we build out the ecosystem, as we see F&F thrive, as we see mobile thrive, financial services thrive, fuel thrive, et cetera, you are seeing retail media doing incredibly well and Whoosh, you are seeing these progressively contributing to profits and allowing us to actually invest even more in that core food proposition. So I wouldn't say it's detaching. I'd say it's reinforcing.

Then on the buyback, what's changed today, look, I think first and foremost, the thing that we look at is where else can we invest in the business that drives returns. We run a very disciplined ship, I would say, on capital allocation in general, right? Back in, I would say, back in April with all the uncertainty around the Iran situation, the consumer situation, we felt good about where we were and keeping it flat. As we realized, you know what, the profit growth is coming through better than we anticipated. The cash generation is strong, and we feel confident.

The first thing we decided to do was reinvest more money back into capital expenditure for the year to go by accelerating some of next year's initiatives into this year. Our ROCE at 15% gives us confidence that when we spend the capital, we will get returns that will help us grow faster in the future. So that feels very, very good. And then after having made those decisions, there's some excess capital that we had felt is left. Why not use that as well? Because honestly speaking, I see Tesco has really good value and why not send that signal and also spend that money because it's a good return.

We'll now get to our next question from Francois Digard from Kepler Cheuvreux.

I would like to focus, please, on the new profit streams. First on Whoosh, could you help us understand the business model and are the profits incremental since the first pound on how the size of the business has changed the nature of profits you can extract from that? And secondly, on Retail Media, I suspect you are not going to share the amount of revenues or profit. However, could you help us understand the share of this incremental profits that have been through to the bottom line and the share that have been already invested to capture more sales as in the past, it was more that direction. And now apparently, it is flowing through.

Thank you, Francois. It's true to say that we don't think about the business in the way that you described. We don't think about income streams in isolation and then proportional investment back into price. We think about it holistically. So we have, as you know, the objective of winning with customers front and center. So customer satisfaction score at a record level of 33 is really, really important to us at the half year. We think about our value proposition. So being the cheapest full-line grocer at the half year is super important to us.

And after that, we think about all the other aspects of the customer proposition that make us a success. So the investment in quality, new product innovation and, of course, the shopping trip. And when all those things are true, we know that we have a very competitive proposition and that generates the kind of traffic and footfall into the business that we need. And that, in turn, is what greases the wheel that allows us to win with suppliers and generate more retail media income and it drives our quick commerce platform. And it all works effectively as a virtuous circle ecosystem.

And then we maintain that capital framework that we laid out about 5 years ago in terms of modest top line growth, 5-plus percent operating profit growth, double-digit EPS growth, a very disciplined capital investment approach, but progressively more investment in capital as we're able to drive a higher return on capital employed, resulting in great shareholder returns from very solid foundations, all rooted in the customer. So we never really think about it in isolation, and we never disclose it in isolation because we don't want to be a hostage to fortune. What we want to do is continue to win with customers and use our core food business as the engine for that. I know it doesn't answer the question directly, but it's how we see the business.

But even on Whoosh, could you maybe just describe the business model with the partners in terms that it is purely incremental for you, any new pound of sales through Whoosh is profitable?

Yes. Absolutely. It is. I mean we couldn't stand here and say to say every quick commerce pound is truly incremental food. But what we have seen is that the cannibalization effect on our store base is very limited. It is truly incremental in terms of it driving market share gains. The benefit of our partnership with both Uber and Deliveroo is that it is driving us into quite a significant cohort of customers that are new to Tesco. The partnership platform launched already integrated with the Clubcard, so customers can sign up to Clubcard instantly and then avail of Clubcard offers, and it's proving very successful for us.

Yes. I mean you always have to remember, Francois, the beauty of Whoosh is the stores are already there. The fixed assets have already been built. The CapEx to create Whoosh at the time was around GBP 7 million, GBP 8 million. That is, I think, the pure definition of capital-light investment. And then the labor to deliver is variable. So, and the price premium that you charge more than covers that. So in reality, what you're looking at is a really attractive business model where the fixed asset base already exists.

Even the picking platforms, Francois, the personal devices that we used to pick in the stores for Uber and Deliveroo are the same devices we used to pick for Whoosh. So the colleague in the store only sees one set of orders on a single device.

We'll now take our next question from Xavier Le Mene coming from Bank of America.

Two for me. First one, H1 profit growth suggests that you're becoming definitely more efficient in how you invest in [ gain ] value. But can you help us to understand how customers' investment was split between shelf price investment, promotional activity and personalization in H1? And how do you expect that balance to evolve over the next few years, especially when you think about personalization versus shelf price investment? That's the first one. Second question is, you talked a lot about the ecosystem, but how Eastern Europe fits into that ecosystem overall? And what do you think about that business going forward?

Great. Thank you, Xavier. I'll take the second one and then pass to Imran to talk about the promotional participation mix. So I would say that Central Europe has been a great business for us this half. If you look at its performance, it's delivered very strong profit growth. I'm really pleased with the team's performance. They delivered that on the back of sharpening their price position versus the competition and improving the efficiency.

The real benefit of it from an ecosystem point of view is that, of course, it has to do very little innovation on its own. It can lift and shift all of the technology spend that we have in the U.K. and apply it to its local market. And that's been really helpful. And particularly, you can see that in their online performance where they had very strong grocery home shopping growth, largely using completely U.K. built systems. So that's really how it fits into the ecosystem.

Then on the half 1, look, the percent sold on deal is around 35%, 36% or so, if I take the average for the first half, which is a slight step up, as I said earlier. If you think about the vast majority of investment, the way we're still doing it is we still have 700 items on Aldi Price Match. We still have around 10,000 to 12,000 Clubcard prices at any given time and around 1,000 to 1,500 low everyday prices on daily essentials. So that framework, that structure continues to exist.

Clearly, there's a lot of partnering with supplier brands when you think about Clubcard prices and then there obviously the investments that we're making on our own end into own label. Then I'd say the vast majority is still on-shelf promotions that you find. Clearly, personalization is growing, but I'd say the majority is still on-shelf promos as you would see them.

We'll now go to our next question from Benjamin Yokyong-Zoega from Deutsche Bank.

I've got a couple, if that's okay. Firstly, just on rapid delivery. How is the scaling of rapid delivery being managed from a store perspective? Does this simply entail more staff hours? And thinking about the medium term, do you think the structural capacity of store picking can shift with technology improvements, for example, in-stock replenishment? And then secondly, just on your price position. You mentioned Tesco is the cheapest full-line grocer in the U.K. Could you comment on how your relative price position evolved over the past, maybe against the discounters versus Big 4, if that's helpful.

Thanks very much. Ben, I'll take the first, and I'll ask Imran to take the second. So on rapid delivery, we have a very well-established business model through Whoosh, which is now in its fifth year, growing incredibly strongly at a rate of 40% year-on-year. So the business is used to high-growth business models like rapid delivery, and it's a well-honed machine in terms of how it operates in store operationally. And as I mentioned on the previous question, we're able to use the same ordering interface as Whoosh for the Uber and Deliveroo orders coming into the store. So from an operational point of view, it's really been quite seamless.

You're absolutely right to say that the proportion of quick commerce orders in some stores is getting quite high now. And that starts to mean we need to think about how we adapt the environment in those stores and the business model as we look forward. And that will involve looking at all sorts of optimization opportunities, whether it's being able to pick partially from dark store in big urban areas or other automation robotic solutions. The one thing that we're doing in the near term that will help a lot, of course, is the rollout of our electronic shelf edge labeling, which is primarily, at this point, only in large stores, but it will make quite a difference in terms of releasing capacity and store hours to be able to pick more quick commerce orders. So that's something that will help in the short term, and then we will constantly evolve the solution for the longer term.

On price position, maybe a couple of comments. I mean, one, Ken mentioned it already, but I think it is important to keep that in mind. It is an extremely competitive and rational market at the same time. So when you think about a market that has at least 7 players or at least 5% market share, that is, you can imagine that's the doing of a very, very competitive market. So clearly, it is important to be on it, and we continue to be on it.

I won't go through a play-by-play on how we fare against everyone. What I would say to you is, as the months progressed, we found ourselves getting stronger than where we were at the beginning of the half. I would also say to you, where I feel very good is we continue to be very strong on holding the 700 or so Aldi Price Match lines. Obviously, that moves up and down depending on the time of the season, as you have different seasonality impacts. But overall, I think we're in a very good shape on that front. So I would say more to come in the second half in that vein.

We'll now take our next question from Monique Pollard at Citi.

A couple of questions, if I can. The first was just on food volumes. So you mentioned in the statement volume growth in Ireland and CEE commentary that there's volume growth in Finest. Just if you could give us any commentary on U.K. food volumes overall, please, would be very helpful. And the second question, sorry to come back again on the rapid growth on the third-party platforms. But what I was interested in, I know it's very early days, is whether you think at the start, you're sort of expanding the TAM of the market with launching on these platforms or whether at the moment, a lot of your growth is coming at the expense of the other competitors on the platforms?

And secondly, when you're thinking about the profitability from that platform, at the start, there was, I guess, some joint marketing investment coming from these platforms. What is the risk over time they start to sort of ramp the commission rates as you become more integral to those platforms?

Let me take the rapid one first, Monique. I'll pass over to Imran to talk about volumes. So I would start by saying that we're really pleased with the progress on rapid delivery as a channel. And we're pleased for a number of reasons. The key one is we got to #1 on a stand-alone basis through Whoosh. So we have real critical mass and real capability on our own quick commerce platform, which is completely integrated into our store stock systems, into our Clubcard and into our marketing. And we think that's a real critical differentiator for us and something we were very passionate about when there was a lot of pressure for us to go on to the other platforms earlier on.

And what we think is that gives us the ability to think about the partnership with Uber and Deliveroo as a way of reaching customers that don't participate in the Tesco ecosystem today. And that's how it's playing out. We're seeing the vast majority of the sales coming on to Tesco from those platforms as incremental, more than we anticipated. And a large proportion of them are new to Tesco. And we're seeing strong Clubcard sign up on the back of that. So strategically, it's working for us, and it's also economically attractive. So that is the good news.

Like all these things, Monique, they develop over time, and you have to constantly be aware of whether or not interests align into the long term. What's very important to us is that we have a very strong independent quick commerce capability that continues to be the best value and best customer service proposition in the marketplace alongside those partnerships, and we uniquely occupy that space.

On food performance, I think the starting point I'd say to you is the first half of last year, the half we're lapping was around 5.7% growth. And the half that we just concluded was 2.4%, 2.5% growth. As you know, I treat inflation and volume mix in the U.K. as sensitive competitively speaking. So let me try and help. So the way to think about it is volume mix was positive in the half. And therefore, I'm actually feeling quite good about that, especially considering what we lapped.

Understood. That's very helpful. And sorry, Ken, just coming back to that point on the third parties. I understand that the sales are incremental to you. Do you think that the sales are incremental to the platform? Or are you taking share from some other players?

We don't have the data yet, Monique, so I can't give you a straight answer to that. My guess is it's going to be a bit of both.

And we'll now go to the conference call lines to take our next and final question. That will be from Richard Trainor at Bernstein.

On store refurbishments, do you expect these to continue at a similar rate? And how do you think about the sales uplift that they drive and the, I guess, the CapEx payback on them? And then the second question, do you have any expectations for the upcoming budget in the U.K.? And what measures would most help Tesco and help the industry?

Thanks very much, Richard. On the store refurbs, we look at them through 3 lenses. Clearly, one is essential maintenance. So you just have to replace the fridges after a certain amount of time, and you have to refresh the store, and that's absolutely intrinsic to the brand and the customer experience. So we look at part of the spend in that way. The second is that there's a big sustainability element to our store refurbishment plan because we are replacing harmful refrigerants from a climate perspective with much more climate-friendly and much more energy-efficient fridges.

The third is we saw this summer that as temperatures rise, we need to insulate ourselves against future weather extremes. And so that's going to be an important part of the refurbishment as well. And of course, the last piece is that it gives us a chance to really showcase our strategy of winning in food.

So it allows us to project a fresh first proposition as you go into our refurbished stores. It allows us to bring bakery forward and really showcase the fantastic work we've done in innovating in the bakery area and really bring to life the strategy in store. It also allows us to reimagine the F&F footprint and really bring a proper fashion feel to that. So there are a number of different aspects to our refurbishment program, and we continue to do it in a very disciplined and organized way and will do for the foreseeable future.

In terms of the budget, our ask always of any government that's in power is that they think about the budget from the perspective of not introducing any measures that would put pressure on the cost of living and particularly on the cost of food and that they bear in mind that the cost of doing business is as important as the cost of living. And therefore, a budget that promotes greater employment, greater investment in British industry, attracts foreign investment into the country, creates a growth economy and broadens the prosperity base, we think are the most important principles of any budget, and that's our ask of the government.

And that does conclude the Q&A session for today. So I'd just like to hand it back to Ken for closing remarks.

Well, listen, thank you all for joining us this morning and taking the time to listen to the presentation and to present some excellent questions to both myself and Imran. We're very grateful for the time you invest in Tesco. We'd just like to wrap up by reiterating how pleased we are with the first half performance. Our customer satisfaction score is a real standout for us because that really determines how we feel about performance. But it's really pleasing to see such a strong financial performance also across the board. We feel really well set up going into the second half of the year, and we're really all looking forward to Christmas. Thank you again, and we look forward to seeing you soon.

Good morning, everyone, and thank you for joining Imran and I following the publication of our first quarter trading update earlier today. We've made a good start to the year. I'm particularly pleased with our strong customer satisfaction scores, helping to drive further sales growth on top of the exceptional performance we delivered last year. Alongside ongoing investments in value, quality and service, we are making strong progress against the longer-term growth drivers we set out in April, including personalization, retail media and digital capability. As we build on the unique strengths of our business, we are unlocking sustained long-term growth for all our stakeholders.

I'd like to say a big thank you to all our colleagues for their continued hard work and commitment. Their focus on delivering consistently great service has once again been key to our performance. Before opening the call to your questions, I would like to take a few moments to run through some of the highlights of the quarter.

Like-for-like sales in the U.K. grew by 1.8%, against a particularly strong comparative period last year, which benefited from record-breaking weather and disruption at some of our competitors. This was also reflected in market share, where we broadly held our own across the quarter and saw a small decline in the latest 4-week read as we started to lap the strong comparative. Fresh food led the performance with like-for-like sales growth of 3.6%. Finest also remained strong with sales up 9%. Online continues to grow strongly, with sales up 8.9%, including another strong contribution from Whoosh, where sales grew by over 30%.

Alongside a further expansion of Whooshes to more households, we also rolled out a book for later option, giving customers more choice and flexibility for same-day delivery. Food innovation remains an important driver of our success. And during the period, we launched over 500 new and improved products, including more than 200 in Finest. Our progress on quality was also recognized externally, including 2 good housekeeping Retailer of the Year awards. With the conflict in the Middle East contributing to uncertainty for many households, we have continued to invest in the parts of the shopping trip that matter most to our customers.

During the quarter, that included extending Aldi Price Match to more than 2,000 Express stores. Alongside thousands of Clubcard deals, our extended Everyday Low Price program and our ongoing investments into great quality and service, we're committed to giving customers the very best value for money, however and wherever they shop with us. We are also committed to supporting the communities we serve. During the quarter, we announced plans to double the size of our free Fruit & Veg for Schools program, reaching more than 1,000 schools every week from September.

In Ireland, we have again delivered strong volume-led growth across all channels. Like-for-like sales increased by 3.3%, with particularly strong online performance. New store openings are also making an important contribution to growth in Ireland with a total sales growth of over 5.6%. Booker's performance across retail and catering reflects both a strong prior year comparative, which benefited from favorable weather and the impact of exiting a lower-margin retail contract in the second half of the year. Underlying growth across retail and catering remains solid on a 2-year basis with customer satisfaction scores making further progress. During the period, we also added a further 146 retail partners.

In Central Europe, we delivered modest growth, supported by volume gains and an improved mix in food. Online performed especially well during the period. and we are pleased to see a significant improvement in consumer confidence in Hungary. Alongside good short-term progress, we are also making strong progress against our longer-term strategic ambitions. For instance, our new Adobe-powered personalized communications platform has now gone live, step-changing our capability to give customers more relevant inspiration, offers and reminders. And we were really excited to give all of our colleagues exclusive access to our AI meal planning assistant as we fine-tune it ahead of a broader rollout to customers later this year.

As we start a summer of major sporting events, including the Football World Cup, we are seeing strong engagement from our suppliers as they look to connect with customers. That includes product exclusives from brands such as Budweiser, Walkers and Pepsi. Alongside innovative retail media activity, the World Cup is a clear example of how we are creating engagement moments for brands and customers. We're already seeing customers get into the World Cup spirit. On Saturday, sales of Irn-Bru were up 50% ahead of the Scotland game, and cocktail cans were up 185%. Last night, we also extended our Whoosh operating hours until 11:00 p.m., so that England fans could get drinks and snacks straight to the door without missing a minute of the game, and Whoosh sales yesterday were up around 40%.

In summary, I'm pleased with the start we've made to the year. As customers remain mindful of their spending against the backdrop of continued uncertainty, we are committed to doing whatever we can to deliver the very best combination of price, quality and service. For the full year, we continue to expect group adjusted operating profit of between GBP 3 billion and GBP 3.3 billion and free cash flow within our medium-term guidance range of GBP 1.5 million to GBP 2 billion.

Thank you for listening. I'll now hand back to the operator, and Imran and I would be delighted to take your questions.

[Operator Instructions] Our first question is from Sreedhar Mahamkali from UBS.

And I have 3, please, if you don't mind, right at the top of the queue. Hopefully, that's okay. First one is, is there anything you can help us in terms of shape of trading, particularly towards the end of Q1 and as you entered Q2? I know it's only a few weeks into Q3, so that will be very helpful.

Secondly, I think in the outlook statement, you referred to a good start to the year, as you reiterated operating profit and free cash flow outlook suggested there, Ken. Does that good start mean profit growth in Q1? Is that how we should see it? And last one, you referred to a couple of interesting areas in the release, 15% growth in insurance policies and strong growth in retail media. Again, how should we think about contribution of these to growth of group operating profit this year? I know it's a trading statement, but it will be helpful for us to understand how we should think about those sorts of numbers you referred to.

Thanks very much, Sreedhar. I will take the shape of trade and retail media and insurance question. I'll pass the profit question on to Imran. I think it's fair to say that we are where we expect it to be, Sreedhar. We are lapping exceptional weather last year. And of course, we had disruption amongst our competitor set, which really influenced the base that we're lapping. So I would just say, from a shape of trade point of view, we are where we are, and where we expect it to be.

I would say that we have invested very heavily in value, and our price indices as strong as they've ever been. As you can see from the release, we've also invested in product quality and innovation with over 500 products released. We've extended the Aldi Price Match into our convenience stores, which we think was a really positively received move. And all of that has culminated in a record customer satisfaction score with an NPS of 31. And then as you say, what that's done is that the halo from that has meant that we're starting to see increasing traction with that ecosystem model of trading more people into our financial services products, increasing penetration of our Tesco mobile offering, and winning with suppliers in terms of our retail media proposition, and we won another retail media award during the quarter.

So all in all, we feel like the strategy we laid out for you in April is starting to show real signs of traction. I think it would help us if we could get some sunshine. It's fair to say. So weather-related sales, things like clothing, fresh food, beer, wine and spirits have definitely been impacted by the weather. But other than that, I think the shape of trade is reasonably solid and consistent. I'll pass it over to Imran.

Yes. Maybe if I give just one more comment on the shape of trade. I mean, in April, we did very clearly mention there's going to be a first half, second half play in the sense that we knew we would lap a very strong sort of weather tailwind that we had. You remember the 22 weeks of continuous sunshine was a thing and clearly some disruption at our competitors also benefiting us. Clearly, that straddled Q1, Q2. And I wouldn't want to get into a month-by-month play here. But clearly, it's something that we factored into the shape of our planning.

And also maybe worth to say here as well, we are also very, very clear that, as you know, Sreedhar, we are quite disciplined, and we never go and buy sort of any empty share just because of the difficult lap. So I think we continue to be very happy with how we're trading and the way that Ken described is how we continue to operate.

Then in terms of outlook, I mean, on profit, look, I feel really good about where we are at the end of quarter 1, pretty much played out exactly as we anticipated. You look at the online, you look at Finest, you look at Whoosh, you look at the strategic initiatives, all contributing as we anticipated. The sales of shape -- the shape of the sales growth, exactly where we expected it to be. And frankly, that's also true for profit and cash. Now obviously, there's 9 months to go, so still to play out. But at this stage, really happy with where we landed.

Then this last question that you had, the contribution of profit drivers from media income, from IMS, from mobile. Of course, they're all very helpful. It's part of the strategy. They bring in new customers, but they also bring in new profit, and those are very helpful. As you have seen us perform over the last 5 years, they have been contributing and they continue to do so in a nice way.

Got it. And then just really a very, very quick follow-up. The level of the growth we've seen in Q1, potentially Q2 as you point into H1, H2 there. Is it enough to drive profit growth?

Look, every year, we set out to drive profit growth. And we have -- we said the same as we started into this year, right? As you remember, the range we set out was clearly to give us the space should consumer behaviors change driven by the uncertainty in the Iran conflict. We haven't seen that yet. So I would say 1 quarter in, I feel good about how we are trading and how profit is shaping up. But there's 9 months to go. And to your specific question, can you grow profits with the current shape of trade? Yes.

We'll now take our next question from Clive Black from Shore Capital Markets.

Actually, well done on growing sales against what you were facing into. I just have one question. Last week, the U.K. medical authorities approved a tablet form of disuppressant drug. I just wonder if this is starting to lap on your shores in terms of demand and volume. But also whether you see this development as a positive feature and prospect for Tesco going forward?

Thank you, Clive. Good to talk to you as always. We actually see it as a positive thing. Anything that improves the health of the nation, we think, is a good thing. And as you can see from the last 3 years, the tip of the spear for us has been our fresh food sales growth. We've been really pleased with the consistent quality improvement in our base fresh fruit, vegetables, meat, fish, poultry and the innovation that we brought to that area. So that's been a real positive for us.

I think also, we are one of the few grocers that have retained our pharmacy network, and we're the largest pharmacy chain. And therefore, we're doubling down on helping customers with their health care needs, with their broader health care needs, of which a weight loss service is part of that. And then finally, I would say it's really informed our food innovation program. So we've released a number of high protein, high-fiber product ranges, which actually play to a much broader interest customers have in health care. That goes well beyond GLP-1.

So even before GLP-1 became a thing, I think largely through COVID, we saw a big trend of customers wanting to live better lives, healthier lives, eat better. And that trend has continued and grown. And I think GLP-1 is a subset of that. So we're adapting our business model to take advantage of it.

And so Ken, just by way of follow-up, would you expect volume to reflect these trends, but mix to mean, you won them up?

Yes, I think so. I think that's probably the right way to look at it. Absolutely.

Well, I hope your good lady takes down those Harry Kane posters in your house quite soon and enjoy the World Cup.

Clive, I promise you, in the long list of good-looking sports stars that she has on her wall, Harry Kane didn't quite make the cut.

Our next question is from Izabel Dobreva from Morgan Stanley.

I've got a couple of questions. The first one is on market share dynamics which you saw during the quarter. I suppose the temporary impact from lapping the competitive disruption from last year would has been in your budget and quite well known in advance. So could you maybe comment on your market share, excluding those temporary impacts and what momentum you are seeing in your business outside of that?

And then as a subquestion on market share, could you also comment on the trend you're seeing in the Finest sales? Just because the sort of slowed down a little bit versus the mid-teens number we're used to seeing. So I'm wondering, is that something that is market-wide and you're still getting share in Finest? Or has there been any change there?

And then my final question is just the shape of the buy. As we think towards the 2Q, I guess, there may be a little bit more disinflation to come and some continued months or so on the competitive disruption based on Kantar, so is it likely 2Q will be the lowest point of the year? Or do you think the volume boost from weather and maybe the World Cup will be enough to offset that?

Yes. So let me talk on our planning assumptions. So when we planned the year, you're absolutely right. We took into account the fact that we have not just the weather tailwind, but also the disruption tailwind. And as I mentioned, that straddled Q1, Q2. So absolutely, when you think about the market share reads, we saw the beginning of what I would call a period of exceptional gains. And the last month, you saw that weakening in the 4-week read. That was exactly that. That still continues, in my view, a little bit that big hill to climb. But it's part of the plan. It's part of how we forecast it, which is why when I look at our overall financial metrics, but also the KPIs around all the metrics that we are looking at, whether that's how online, Whoosh, fresh food, nonfood all grew is pretty much in line with expectations. So I think we're in a good place there.

When I look at the rest of the business in terms of excluding those impacts, look, it's playing out exactly as we anticipated, right? I mean the good news is inflation is a little bit lower. As you've seen, I feel we -- the market is calling what was the market around 3.5%. We're meaningfully below that. So actually, when I look at our volume performance, Izabel in both fresh, especially, it's actually quite strong. And between fresh and packaged equally, we're in a good place as it -- broadly slightly ahead, in fact, which is a good thing. We have been impacted, which is maybe worthy of your question to note down is last year, in Q1, we had clothing growth of around 10.5%, 11%. So clearly, as you lap Q1, Q2 because of that weather that's a slight negative, but as anticipated.

So all in all, trading is broadly in line with our expectations, well, fully in line with our expectations. Then Q2, as you would rightly expect, weather will play a big role because you've seen outside, we've had one nice week in May, which was very, very helpful, and we saw it really trade do really well during that period, which is a good sign. But clearly, when you have sunshine, people spend more and enjoy themselves more. And I'm hoping for a longer stay for England and Scotland in the tournament. That is always helpful because I think it also lifts the mood. So when we look at our plans, our propositions, they're resonating well, they're delivering in line with expectations, but we could use a bit of help from the sun.

And Izabel, just to address your second 2 questions. Look, I'm feeling really good about Finest sales because the 9% was building on a particularly strong sales the year before. So I think our 2-year numbers kind of mid-20s in terms of the growth. So that represents an exceptional performance in Finest, and it continues to resonate really well. And of the 500 products that we innovated around in the first quarter, over 200 of them, 220 to be precise, were Finest, including a lot of kind of ready-to-drink cocktails, which saw particularly strong growth in Scotland last Friday.

In terms of the shape of the buy, look, we're very sensitive to weather. The World Cup has been, for sure, factored into our buying and into our thinking around trade plan shape. And with the weather expected to turn really positive next week, we are feeling positive about the shape of trade, and we're well set up for it.

We will now take our next question from Manjari Dhar from RBC.

I just had 2, if I may. First question was on convenience. I just wondered if you could give us some color on the performance of the convenience estate versus the large stores and sort of any more color on the impact of the Aldi Price Match extension to Express? And then my second one, you mentioned the World Cup a few times. I wonder if you could give maybe a little bit more color on historically, how much has -- or how has the World Cup influenced trading, the shape of trading? And is it more sort of the marketing opportunity or a footfall opportunity for people buying a bit more alcohol.

So I can give you a bit of color on the channel sort of split to bring that a bit of life for you. So if you break down the different channels, what you would have is online growing at around 9%, large stores growing around 1.5% and convenience slightly down. That is driven by, obviously, the tobacco industry trends, as you would expect, but also the lap of the hot weather, where you would imagine in convenience, when hot weather comes in, you also have the drinks, the ice creams, the impulse products that clearly have an immediate impact on that. And also the fact that one of our competitors had been quite disrupted within their convenience channels, which obviously have been a tailwind for us last year. So all in all, I look at the market share in all 3 channels, we're in a good place.

And listen, Manjari, in terms of World Cup, yes, we do mention it. I think we mentioned it more from a consumer sentiment point of view necessarily then from a big change in consumer behavior where the weather has a much bigger impact on consumer behavior and buying habits. So I think given that confidence has taken a step back since the war in the Middle East, we think it could, together with a sustained peace deal in the Middle East, give customer -- consumer confidence a bit of a boost, which would be really welcome.

And then if we kind of get some decent weather, which were due to get, I think that will also help a lot. And we're very -- as I said, we've planned for that.

Our next question is from Rob Joyce from BNP Paribas.

So 2 from me. So firstly, I guess, just to clarify, it sounds like Imran, you're saying you're happy with full year EBIT consensus in that sort of upper quartile, should we say, of the guidance range. Just if you can confirm that's the case and also say what kind of volumes we sort of need to see to get there? It looks like maybe minus 1% in the first quarter. How much of a recovery do we need to get there in the latter part of the year?

And then the second one, just -- sorry to get bogged down in the shorter term again, but I do think like-for-like momentum quite important at the minute. I mean, in the second quarter, if we're looking at the sort of softer comps, maybe some staycations and obviously, those Irn-Bru sales coming through. Does it feel like we should have seen an inflection point in the sort of first quarter into the second quarter? Or do you think that could be the third quarter before we start to see the like-for-like improve?

Yes. Look, I mean, I think on the EBIT number, I mean, just to give you the long answer and then the short version as well. The long version being that the range, the GBP 3 billion to GBP 3.3 billion I would say, as I always say, we aim to grow profits every single year. The low end is to give us the flexibility and the space in case a consumer sentiment turns and 9 months to go is a long period. So far, consumer sentiment hasn't turned and has actually been in line with prior year.

And as I said, our first quarter performance on sales, profit and cash is in line with our expectations. So that's a really good place to start off with. Then clearly, if I look at consensus, I feel right now, it's within that range, and therefore, I feel good about where it is. That's also important.

Then in terms of volume, to give you a little bit of color, maybe if that helps, right? So if I take it in the round for quarter 1, volume mix within food is broadly flat, and we had a stronger performance than that even in fresh food. So that's important. Then again, I mean I mentioned it before, but clearly, the volume is impacted as well by the lap within clothing and nonfood, right? So especially within clothing last year, we had an 11%, 10.5% growth or so in quarter 1. So when you lap that, you obviously have a negative impact on that.

Then when I think about this -- the quarters 2, 3 and 4, I think it would be very unhelpful if I did sort of a month-by-month play. But the way we think about it, broadly speaking, is half 1 had fantastic momentum behind it, driven by weather disruption and frankly, our brilliant execution on availability and all the propositions we brought in. I think the availability and all the propositions we're bringing in as strong or even stronger than last year. But as you would expect, there is a lap impact on weather and competitor disruption that was helpful to us. That will straddle Q1, Q2, but I would expect then that -- us to come out of that at some point. But exactly which precise month, I'm not going to get into.

Our next question is from Xavier Le Mene from Bank of America.

So 2, if I may. Just back to Rob's point about the consensus on the guidance range. You've got a good Q1, you said in line with your expectations. So why not potentially narrowing down the range? So what are you concerned potentially not to be a bit more precise going into Q2 and Q3? And the second one is more about the catering and the food out-of-home environment in the U.K. So have you seen any change in the behavior recently? And what are your prospects potentially going forward?

Yes. On speaking on the first question, it's a question of timing, right? I mean we're basically just 3 months in. I mean, you see the same headlines I do, right? I mean we see the same ones as in uncertainty on the macro does exist out there and consumer confidence levels have and continue to be low. The good news is we haven't seen that low consumer confidence translate into different behaviors, and that's good. But look, with 9 months to go, I would say to you, 1 quarter down, happy where we are, 9 months to go, and we'll keep you posted as we come and speak to you again in October.

And then on your second question, which is around catering performance, is that right? And are you talking about wholesale?

Yes, right.

I think, Xavier, if you think about it last year, actually, the catering performance was outstanding, and it was really driven by the exceptional weather we had. And so we've had exactly the opposite this year where we've had very poor weather. So that's had a particular impact on catering performance. But again, from an offer and proposition point of view, nothing has changed. We're as competitive as we've ever been in terms of value. Our reach is unparalleled, and our customer service and satisfaction scores are stronger than ever in Booker. So we don't have any concerns about the fundamentals. But it is a tough market. And clearly, some of the regulation and tax changes have impacted caterers over the last 6 months in particular.

I would also add, Xavier, because I think it's helpful just from a philosophy point of view, the same applies to catering as it does on what we said about the U.K. core business. You don't chase unprofitable sales, right? We don't buy empty volumes just to get a sales number up. I think, A, that impacts the market and its rationality and B, it actually costs you in the end on the bottom line and in cash, and that's just not a healthy thing to do.

We will now move to our next question from William Woods from Bernstein.

The first question is just on the sequential disinflation that you've seen over the last couple of months. Can you just comment on where you're seeing the inflation still come through? And are you seeing any signs of inflation feeding through from the conflict in the Middle East?

And then the second one is on the competitive environment. Obviously, last year was a key focus. How would you describe the competitive environment at the moment relative to last year?

So look, on inflation, we have, as we said, seen inflation step down progressively right through the last 12 months. So quarter 1 this year is even lower than it was in quarter 4 in the last financial year. And that's really been driven by commodity disinflation, some key categories like dairy, coffee, cocoa, et cetera, which has been helpful. We haven't seen material impacts from the war yet as clearly, it's not a large food producing region. And most of the kind of commodities like fertilizer, et cetera, had already been bought for the current season.

Now what we don't know is whether there will be a knock-on effect into the second half of the year from things like fertilizer prices. But either way, we would hope that some of that will be compensated by falling commodity prices. Clearly, commodity price volatility is a thing. And therefore, we couldn't give you any kind of forward prognosis on inflation at this point other than it's materially lower than some people were forecasting. And we're doing everything in our power to minimize the impact on consumers.

Yes. I mean I would also add to that, like clearly, what's good is our Save to Invest program, the GBP 0.5 billion, we're chasing, we're feeling good. That should help us to continue to sort of do that inflate a little bit less, inflate a little bit later than the market. And that comes to your second question, how rational is the market? And I would say to you, last year, as you rightly point out, there was a bit more sort of disruption. And I think we did well through that. We held our own. We reinvested back, and we still grew. This year, I would say, it's highly competitive as ever, but fairly rational across the board, I would say.

We will now take our next question from Monique Pollard from Citi.

Three questions from me, if I can, please. The first was just on nonfood. So Imran, I think you mentioned the tough clothing comp plus 10% in the last period. If you could just give us some sense in the U.K. of what the nonfood growth was like in this quarter, that would be really helpful. The second sort of reading between the lines of what you've been saying on the consumer. Clearly, industry volumes are negative, but they have been for over 12 months. You've seen a bit of disinflation. So is it right to think, given your comments about aiming to the profit growth, et cetera, that you haven't seen any material change one way or another in the consumer environment versus where we were a few months ago aside from things like the weather?

And then the final question I had was just on Retail Media. So you make those points on the number of awards you've been winning and the contribution from that business increasing. I'm just wondering whether the World Cup is quite a good opportunity to leverage that business and what opportunities you see from the tournament.

Okay. Let me then address the first one on your nonfood question. So if it helps just to lay it out for you, in fact. So food grew 2.6% and nonfood grew minus 0.5%. And the minus 0.5% is in the face of that clothing number I talked about of close to 10% or over 10%. So that gives you a sense of how that played out.

On the consumer, Monique, you're absolutely right to say that consumer -- that volumes in the industry have been negative now for over 12 months. And we saw that kind of consumer post the good weather of last summer step-down in the autumn and has stayed largely flat since by way of behavior. So you're right to say that the war in the Middle East and the kind of political uncertainty closer to home have not really impacted consumer behavior.

And your final point in terms of retail media as an opportunity is absolutely an opportunity in terms of World Cup activation. And we have a number of exclusives, as we mentioned, in my introduction with people like Walkers, Pepsi and Budweiser, and we have done a lot of different media activation campaigns to kind of inspire people to enjoy themselves during the World Cup. So you're dead right.

And we'll now take our last question today from Matt Clements from Barclays.

Two quick questions if I can. Firstly, on U.K. consumer again. I think you've been pretty clear on that, but I just wanted to speak in context of the significant increase in fuel prices and your fuel sales being up nearly 20% in the first quarter. Are you seeing any impact of that in terms of people consolidating shops into bigger baskets and fewer trips or perhaps it's supporting online growth with people less willing to go out in the car to do their shopping.

And the second question is just a quick one on market share. With 1Q playing out as you expected in your outlook, is your assumption for the full year that you can still gain market share in the U.K.?

Thanks, Matt. I'll take the second question one first. I think we'd always say every year, we have an ambition to grow share. That's the kind of framework we laid out a number of years ago, and we're very clear about that as an ambition. So the short answer to that is yes. The second point around the U.K. consumer and the impact of fuel, I mean, we have seen a surge in demand for fuel because we're amongst the most competitive in the market. So we have actually gained share during the period. The online trend is actually a continuation of a trend that was well underway long before the fuel prices became an issue and it's just a continuation.

So the growth in grocery home shopping and quick commerce shopping is effectively persisting, and we are taking full advantage of that. It's also fair to say that over the last 3 years, a great source of growth for us has been the consolidation of baskets, and that's something we continue to focus on.

Since there are no other questions, I would like to hand the call back over to Ken for closing remarks. Over to you, sir.

Thank you very much, Sergey. Thank you, everyone, for joining the call this morning. We really appreciate the great questions and your time, and we really look forward to catching up with you again in October for the interim results. Have a great week, and the best of luck to both England and Scotland in the World Cup. Take care.

Good morning, everybody, and thank you for joining Imran and I as we talk through our results for the year. We will also provide an update on our strategic ambitions as we set ourselves up for longer-term delivery in an ever-changing retail landscape. I'm really pleased with our performance across the last year. Against the backdrop of increased competitive intensity, we took decisive action to further strengthen our investments in price, quality and service. These actions resonated strongly with customers, driving further gains in customer satisfaction and continued growth in market share. Our commitment to delivering the best value for customers remains firm and a period of continued pressure on household income and global uncertainty, this matters more than ever. In a year of strong momentum, customer satisfaction stepped down further, and we reached our highest market share for a decade.

This translated into a strong financial performance with both profit and cash flow ahead of our guidance ranges. Alongside strong operational execution, we have been working across the business to unlock long-term growth opportunities, leveraging our unrivaled customer reach, data insights and digital expertise, including the use of AI.

As part of my strategic update a little later, I will cover some of this progress in more detail. Increasing customer satisfaction and market share are priorities for us. And following our progress over the last 4 years, we were pleased to see further momentum this year. Our Net Promoter Score increased ahead of the competition, including an improvement in value perception. In the U.K. our market share reached 28.5%, outperforming on both a volume and a value basis and taking our total share gain across the last 3 years to 120 basis points. In Ireland, we are now in our fourth year of gains with market share increasing 32 basis points over the year to 24.2%. We started last year with a strong price position versus the market. And despite an increase in competitive intensity, we've exited the year in a similarly strong position.

Across the last 12 months, our investments into price, including tripling the number of products in everyday low prices to 3,000, running alongside over 10,000 Clubcard prices and more than 600 Aldi Price match lines. We finished the year with over 10,000 prices lower than at the start of the period. Quality is a crucial part of the value equation. And I'm proud of our work over the year to deliver continuous innovation and improvement across our ranges. Finest is a key part of this story, delivering sales growth of 15% with our popular dine-in deals performing especially well.

We also launched exciting new ranges like Chef collection, which offers restaurant quality center pieces designed by Tesco's in-house development chefs. But it's not just about Finest. Our frozen range refresh in the second half are biggest for many years, so hundreds of new and improved products across tiers from tasting new recipes and prepared meals and pizza to delicious new frozen desserts.

Our colleagues are the driving force behind our performance, and I would like to extend my personal thanks for all their hard work over the past year to deliver these strong results. In recognition of the exceptional service they have given customers, we're really delighted to be announcing a GBP 65 million performance award for our hourly paid colleagues in stores, distribution centers and customer engagement centers. This follows a further GBP 209 million investment in colleague pay for our U.K. store colleagues, bringing our total hourly pay increase to 43% over the past 5 years, which comes alongside a comprehensive range of colleague benefits. One of those benefits is our save as you earn company share scheme. And I was particularly delighted to see that over 22,000 colleagues mainly those working in store and our distribution centers were able to benefit from GBP 134 million payout from the schemes maturing this year. By consistently delivering for customers, we are creating long-term sustainable value for all our stakeholders. Our fruit and [indiscernible] schools program continues to make a significant impact in some of the most disadvantaged communities across the U.K. It has now expanded to 500 schools, offering children improved nutrition and education on healthy eating.

A further 320 schools in Ireland also benefit from our stronger [indiscernible] food program. Strong supplier relationships and collaboration are fundamental to our success, and we were delighted to be ranked first in the independent advantage survey for the tenth year running. We've also made good progress with our planet plan, including a 68% reduction in our Scope 1 and Scope 2 emissions, well ahead of our plan for a 60% reduction by the end of 2025. And for our shareholders, we returned GBP 2.4 billion through dividends and buybacks during the year. I'll return shortly to provide you with an update on our strategic ambitions, but before that, I'll hand over to Imran.

Thank you, Ken, and good morning, everyone. I'm really pleased with the performance across the year. Following several years of good progress and against the backdrop of elevated competition, we saw consistent market share gains and improved customer satisfaction, which is reflected in our strong financial performance across the year. I'll now take you through our financial performance before taking a step back and setting up our longer-term financial priorities. This year, our statutory results cover a 53-week period. For comparability, the headline results are presented on a 52-week basis unless otherwise stated.

Group sales grew by 4.3% at constant exchange rates. This included a 3.5% increase in like-for-like sales, reflecting growth across all our operating segments. Group adjusted operating profit increased by 0.6% at constant rates to GBP 3.15 billion driven by sales growth and progress on our safety Invest program offsetting operating cost inflation and investments in value, quality and service. Our headline earnings per share increased 6% year-on-year to GBP 29p, benefiting from our ongoing share buyback program and growth in profit after tax. Our cash delivery was strong with GBP 1.96 billion of free cash flow, up 12% year-on-year and above the upper end of our guidance range. We have proposed a final dividend of GBP 9.7p per ordinary share resulting in a full year dividend of GBP 14.5p. This represents growth of 5.8% and is in line with our policy of setting our annual dividend at probably 50% of earnings.

Our balance sheet remains strong. Our net debt, including capitalized leases, was GBP 10.56 billion at the end of the period with our net debt-to-EBITDA ratio at 2.1x. The U.K. and Ireland saw total sales growth of 5% and adjusted operating profit growth of 0.7%, with further volume and value market share gains and progress in safe to invest more than offsetting significant investments into the customer offer and operating cost inflation. Booker sales increased by 0.6%, and adjusted operating profits grew by 0.7% year-on-year. Sales growth in our core catering and retail businesses, together with a strong safe to invest contribution more than offset operating cost inflation. In Central Europe, our sales grew by 3.7%, with the adjusted operating profit performance reflecting the net effect of the benefit of sales growth, a further contribution from safe to invest and lower rental income following the sale of some of our mall properties in the prior year.

Now what I'll do is I'll go through each market's performance in more detail, starting with sales before moving on to profit. In the U.K., sales growth of 4.9% included like-for-like sales growth of 4.2%. Our food labor like sales grew at 5.2% with a strong contribution from fresh food, up 6.9%. Finest was once again a standout performer and grew 14.5% over the year, driven by strong volume growth. Our clothing like-for-like sales grew by 5.1%, driven by womenswear with expanded ranges in activewear and our curated FNF edit ranges, both performing very well. Like-for-like sales grew across all channels, including large store like-for-like of 3.9%. We also took share across all channels, including 71 bps of market share gain in convenience and 30 bps in online. U.K. online sales grew by 11.2%, driven by volume growth and included a circa 2 percentage point contribution from Tesco Rush, where we extended national coverage to over 70% of households. Average online orders per week for our Grocery Home Shopping business grew by 6% as we rolled out more slots to customers and made further improvements to our upside.

In Ireland, like-for-like sales grew by 4.6%. Total sales were up 6.6% at constant exchange rates, including the contribution from 9 stores we opened in the year. Food like-for-like sales grew by 5.1%, supported by a fresh food offer and further growth in Tesco Finest. As in the U.K., we grew across all our channels with online delivering 17.4% growth as we reached over 94% national delivery coverage.

Home & Clothing like-for-like sales were down 1.8%, reflecting the impact from the transition to a commission model for toys as in the U.K. Booker like-for-like sales increased by 0.2% despite the ongoing decline in tobacco sales. In core retail, like-for-like sales were up 2.2%, and we continue to expand our symbol brands, adding a further 369 net new partners. Core catering like-for-like sales grew at 3.8% and customer satisfaction scores improved as we continue to deliver great value and availability for our customers.

Growth was further supported by Venus, our specialist wine and spirit merchant as well as the benefit from good weather over the summer. In Central Europe, like-for-like sales grew by 2.2%, with fresh food up 4.1%, supported by our investments in value. Finest performed strongly with over 30% sales growth. All 3 of our channels grew over the period with online reaching 17.5% growth, while growth in large stores was impacted by softer home and clothing sales reflecting lower consumer confidence in the region and poor weather during key trading periods.

Customer satisfaction continued to grow through the year, and we set up our customer rewards as we celebrated 15 years of Clubcard in the region.

Let's now turn to profit. At a group level, we delivered GBP 3.15 billion of adjusted operating profit, up 0.8% at actual exchange rates. Our strong trading performance, together with a GBP 535 million contribution from Safe to invest more than offset the impact of our significant investments in the customer offer and elevated operating cost inflation, including from increased regulatory costs. This slide reconciles adjusted operating profit to statutory profit after tax, which is presented on a 53-week basis. Total adjusting items represent a net charge of GBP 153 million. This includes the ongoing amortization of acquired intangible assets of [ GBP 38 million ], principally relating to the merger with Booker, and a noncash net impairment charge of GBP 53 million. Restructuring costs mainly relate to our Safe to Invest program, including costs associated with our multiyear program to optimize our distribution network in the U.K. We incurred GBP 28 million in separation costs relating to the disposal of our banking operations. We do expect the transition to complete in the current financial year. We delivered strong free cash flow of GBP 1.96 billion versus GBP 1.75 million last year.

Cash generated from operations increased by GBP 522 million, driven by profit growth as well as strong working capital inflow of GBP 385 million. The working capital inflow was mainly driven by our sales performance, strong working capital management and higher non-trade payables. Cash CapEx was GBP 1.5 billion.

Looking back over the last 5 years, our disciplined approach to investing in high-return areas has fueled sustainable growth and cash flow. This, in turn, has allowed us to steadily increase our capital expenditure while significantly improving return on capital employed, which remains well above our weighted average cost of capital. Over the period, we have continued to return cash to shareholders in the form of dividends and share buybacks. Since the commencement of our share buyback program in October 2021, we have bought back GBP 4.3 billion worth of shares at an average price of GBP 3.17 per share.

This slide provides some additional detail on the nature of our capital investments. Our core operations are the foundation from which our opportunities are built. We continue to maintain and refresh our estate, ensuring that customers get the store and online experience they expect from Tesco. We are also investing strongly into productivity and growth initiatives. Our Safety Invest program has allowed us to simplify, become more productive and reduce costs across our business.

This includes the ongoing optimization of our distribution network, which powers our market-leading availability. With a focus on leveraging our existing assets, our future growth opportunities are generally capital-light. The capital that we do spend is focused on high-return areas such as technology, including investments into new digital platforms and AI.

Looking now to the balance sheet, which remains strong. Net debt was GBP 10.6 billion versus GBP 9.5 billion last year. The increase is mainly due to the prior year, including around GBP 700 million of proceeds from the sale of the group's banking operations, which we returned to shareholders during the course of this year. Lease renewals and extensions also drove a GBP 168 million increase in lease liabilities, and there was GBP 144 million net outflow for property transactions, primarily the buyback of 7 stores in the U.K. Our net debt-to-EBITDA ratio is at 2.1x, and our fixed charge cover is 4.1x, in line with the prior year. During the year, and alongside the scheme's trustees, we agreed the triennial funding valuation for our principal defined benefit pension scheme.

On a technical provisions basis, the funding position of the scheme remains in surplus and it was therefore agreed with the trustees that no pension contributions will be required from the group. Our progress across the last year builds on our strong delivery since we first set our multiyear performance framework in 2021. We are proud to have delivered average sales growth of 5.2% across the period, alongside group adjusted operating profit growth of 7.9% and adjusted EPS growth of 12.2% with nearly GBP 8 billion of cumulative free cash flow across the 4 years, we have comfortably exceeded our expectations of cash delivery. Our capital allocation framework has been a crucial foundation for our financial performance.

In a moment, Ken will cover our evolved strategic ambitions and as we position the business for future growth, the framework will remain central to how we execute our strategy and create long-term value. Our first priority is to reinvest into the business and strengthen our customer proposition, prioritizing high-returning areas and supporting sustainable long-term growth. As we reinvest, we will remain committed to maintaining a solid investment-grade balance sheet. We continue to deliver a progressive dividend, targeting a payout ratio of roughly 50% of earnings, consistent with our recent track record. We also remain disciplined and alert to inorganic growth opportunities that complement our longer-term strategy. Finally, any surplus capital after these priorities will be returned to shareholders. For

the year ahead, we expect around GBP 1.6 billion of capital expenditure, and we are announcing today a further GBP 750 million share buyback. We first set out our multiyear performance framework in 2021, and it continues to guide our approach. By focusing on improving customer satisfaction and growing or at least maintaining our U.K. market share we intend to drive top line growth. By leveraging our assets, growing new revenue streams and targeting productivity initiatives to offset inflation, we aim to grow absolute profits and maintain sector-leading margins. Since setting out the framework, our delivery has exceeded our initial expectations and with our confidence in future cash flow increasing, we are upgrading our medium-term free cash flow guidance to between GBP 1.5 billion and GBP 2 billion per year versus the old range of GBP 1.4 billion and GBP 1.8 billion per year.

So in summary, I'm pleased with our strong performance across the year. We have delivered further improvements in customer satisfaction, market share gains and cash flow ahead of guidance. Our performance in capital frameworks continue to guide us and underpin our delivery and we have returned GBP 2.4 billion this year to shareholders through a combination of dividends and share buybacks. For the year ahead, we are providing a wider range of guidance than we were previously planning, reflecting the increased uncertainty caused by the conflict in the Middle East, much will depend on the duration of the contract and the consequential impacts on the U.K. households and the economy more broadly. At this stage, we expect group adjusted operating profits of between GBP 3 billion and GBP 3.3 billion. We expect free cash flow within our upgraded medium-term guidance range of GBP 1.5 billion to GBP 2 billion. I will now hand back to Ken, who will provide an update on our strategic ambitions.

With our highest market share in a decade, meaningful growth in new revenue streams and strong free cash flow. Our delivery against the multiyear performance framework we set out in 2021 has exceeded our expectations. As we look to the future, we have built strong digital capabilities, including in retail media and personalization. Our success has been shared with our broader stakeholders, too, including investing more than GBP 1 billion in store colleague pay over the last 5 years. However, the retail landscape continues to evolve, and so do we. Households have had to adjust to persistent cost of living pressures and competition remains intense with new entrants and technologies, giving customers more choice than ever. Customer expectations are increasing too. In addition to fantastic value, customers also want food that supports their health goals from a brand they can trust to do the right thing.

To continue delivering for all of our stakeholders in this changing landscape, we have evolved our strategic ambitions into 5 mutually reinforcing goals. These ambitions position us to deliver even better value to our customers while driving sustainable long-term growth. Our 5 ambitions form a connected ecosystem, all designed with 1 clear purpose, continuing to deliver for our customers. Over the next few slides, I will take each ambition in turn and explain what they mean to us, what we've achieved so far and offer some insights on how we are building for the future.

Our first goal is winning in food, delicious, affordable and nutritious food matters more than ever to our customers and their families. And we know that they are looking for the best combination of price and quality across our ranges. With 3,000 everyday low prices, over 10,000 Clubcard prices and more than 600 products in Aldi price match, we offer customers an unrivaled value proposition. We're proud of the improvements we have made in our price position in recent years, but this is an area where we can never be complacent. As our digital and personalization capabilities evolve, we are constantly looking for new ways to help customers to save. Of course, value for money is about quality as well as price. And we are continuing to invest in quality at every year.

Finest has been a great success story for us, but there is so much more to go for. through developing new products, expanding ranges and getting Finest in front of more customers, including through AI-powered ranging tools, we aim to grow finance well beyond GBP 3 billion in sales.

At the same time, we're launching new products that reflect changing customer trends and preferences such as expanding our gut sense and high-protein ranges. Through our market-leading presence across stores, online grocery and rapid delivery, combined with the reach of Booker's wholesale business, we are better placed than anyone to serve customers' food missions, wherever, whenever and however they want to be served.

Wush is a great example of this. Launched just 5 years ago, Wush has grown to be a meaningful part of our online offer, generating over GBP 400 million of sales and now covering over 70% of the U.K. households. We see more to go for in this fast-growing part of the market. This year alone, Wush grew by 51% in the U.K. And we have started to roll out the service in Ireland, 2. We've achieved this largely through using existing infrastructure and resources, demonstrating our ability to grow new revenue streams in a capital-light way. The frequency and troughs we have built through food allows us to serve families a much wider range of products and services, and we want to help meet even more of their everyday needs.

Some of these are well established. For example, since its launch in 2001, F&F has been known for providing stylish and affordable clothing at outstanding value available in our stores and now on line too. Tesco Mobile is the U.K.'s largest mobile virtual network operator. With over 5 million customers, it was recently voted the U.K.'s best network for customer service for the fifth year running. Our insurance and money services business is providing coverage to our customers through 2.5 million policies and 4 million customers are accessing a range of banking products through our partnership with Barclays. We see huge potential to enhance and grow our existing products and services, and F&F is a great example of this. F&F Online made an encouraging start following its launch last year, but we know we can go further enhancing the customer offer. So later this year, we will be launching an exciting new F&F website, which includes a fashion forward look and feel, greater style curation and smarter search functionality.

In the past, expanding into new retail categories tended to be expensive and high risk. Our approach is focused on leveraging what we already have and committing capital in a disciplined way. Marketplace is an example of this and has great potential. We are making good progress and already have seen the benefits it can bring to the wider business. Marketplace has now served over 1 million customers and more than half of them have never shopped online with Tesco before. As part of refining the offer, we have recently migrated our platform to [indiscernible] to improve the seller onboarding process and enhance the customer proposition.

Our 355 in-store pharmacies give us a real point of differentiation in the market. Combined with our ability to offer an ever wider range of healthy, nutritious food they give us a great opportunity to be customers' first choice for health and well-being. We already serve 0.5 million customers per week with everything from prescriptions to vaccinations blood pressure checks and expert advice on a range of common conditions. Our pharmacies also play a key role in our long-standing charity partnerships with cancer research the British Heart Foundation and Diabetes U.K. By using our unique data and insights to build new partnerships and revenue opportunities, we can become the most strategic partner for our suppliers for innovation and brand building.

Clubcard is the U.K.'s largest loyalty program, regularly used by more than 24 million households, spanning our offer from food and telecom to banking. It gives us an unrivaled understanding of our customers, enabling us and our supplier partners to serve their needs more effectively. Tesco Media is the largest closed-loop media and insight platform in the U.K., leveraging our expansive store and digital candies, that has seen significant growth in recent years and ran over 12,500 campaigns in the last year alone, with over 90% of advertisers increasing their spend on the platform year-on-year. The Tesco Media team are innovating at pace. For example, our recently launched AI-powered creative studio tool helps advertisers streamline the production of digital content making the platform accessible for all brands regardless of their size or budget. Building strategic brand partnerships is about more than retail media. The scale and breadth of Tesco means we are uniquely placed to help brands grow.

Our platform can offer everything from access to distribution through our grocery and wholesale channels to self-serve tools that provide insights into customer behavior and opportunities to grow further. Our well-established accelerator program helps small and trend-led brands offering mentoring and development experience. including supporting product formulation, marketing and enhancing their supply chains. We are already partnering with hundreds of suppliers to drive development and innovation. And we think there is potential to bring our expertise to many more.

Underpinning all of this is our Don Humbly business, a market leader in data science. Don Humby team of data scientists, engineers and retail consultants further developed Tesco's intelligence layer, connecting customer and brand insights, analytics and global retail expertise. Using Don Humbly's data science and AI to connect the dots across our retail business is helping us to make smarter decisions at pace. For example, with Bon Humby, we're using AI-enabled data science to transform ranging decisions, moving a process that took weeks into minutes. Our next goal is to be connected, personalize and loved by customers. Alongside our stores, our colleagues are central to the customer experience. We are incredibly proud of the service our colleagues give customers day in, day out.

Last year, we invested in over 1 million hours of training for our U.K. store colleagues. We want our colleagues to be our biggest advocates. We have great foundations for this. with the proportion of our colleagues recommending us as a place to work and shop significantly above industry averages. With the largest network of stores in the U.K., we continue to meet local needs better than anyone. From large stores offering our full range of services to express and 1 stop serving their local communities, we continue to invest in our estate with a particular focus on our fresh offer, helping every Tesco become the preferred store in its community. Customers should feel rewarded every time they shop with us. ClubCard has been at the heart of this for over 30 years. And we're always looking for ways to make ClubCard even more rewarding, whether it's new ways to collect points, making Clubcard points go further or small but meaningful gestures that make a customer's day a little better. By harnessing advancements in AI, the power of Clubcard data and our own digital capabilities and partnerships, we see enormous potential to make every interaction more seamless and relevant by anticipating needs, offering timely nudges and making smarter recommendations. Our strategic partnerships with Adobe and WPP are an important part of this. unlocking new opportunities to provide real-time personalized content, whether direct to customers or through third parties. Another opportunity is personalized offers. We have made great strides on this already from personalized coupons through to gamified experiences like Clubcard challenges.

We're pleased to take this a step further with the recent launch of your car prices to 1.5 million customers and a wider rollout coming later this year. Key personalization is showing customers that we understand them, offering interesting and timely communications that inspire and anticipate their needs. Our new brighter and bolder style of customer communication is one of the ways we're achieving this. We're also excited about our new AIR system with large-scale trial launched to around 280,000 of our colleagues ahead of a wider launch later in the year. The AI system is part of the Tesco app and will initially help customers with meal planning, offer inspiration and help build shopping baskets. We are always looking for ways to make our business even more sustainable for the long term.

We have a strong track record of making Tesco simpler, more productive and more cost efficient through our Safe to Invest program. This has helped us to unlock GBP 2.2 billion worth of savings over the last 4 years, providing the few for our investments into the customer offer and higher pay for colleagues. We are also investing to strengthen our resilience, efficiency and sustainability, ready for future growth.

We recently opened a new semi-automated fresh distribution center in [indiscernible] and during the year, we started consumption on our new distribution center at London Gateway. Our work to further optimize the business will continue with a target to unlock a further GBP 500 million of savings in the year ahead. Supply chain resilience is central to managing risk. We're proud of the strength of our supplier relationships with long-term commitments to many of our key partners, they can have the competence to make long-term investments in their businesses.

Technology plays a key role in supply chain resilience, and we have developed new and unique risk mapping capabilities that identify and help us address potential sourcing challenges. As British agriculture's biggest customer, we're committed to deepening partnerships with farmers, including through our 6 Tesco sustainable farming groups covering everything from cheese to land. The farming industry faces a long list of challenges and the sustainable farming groups provide a forum to collectively improve innovation, quality standards and industry collaboration. We see a much wider opportunity for technology and AI to further enhance our business. Over the last 6 years, we have doubled the size of our technology team.

And we are equipping our colleagues with tools that simplify everyday tasks, freeing them to focus on what matters most. AI is evolving at an extraordinary speed. So putting the right frameworks and governance in place is essential both to protect our business and to capture the full value of these innovations. We recently consolidated nearly 250 individual work streams into a single coherent AI strategy focused on 4 domains: customers, colleagues, supplier partners and operational efficiency. Our planet plan is another key element of our wider business sustainability ambitions. We were an early adopter of science-based emission targets, and we're making good progress having now reduced go 1 and 2 emissions by 68% versus our 2015 baseline. We were also pleased to reach our target at year-end of 65% of our sales being classified as healthy. And we've got ambitions to go further.

Achieving our individual ambition can help us deliver even better value for customers. But the real power comes from bringing these 5 goals together, creating a leading food first retail ecosystem. By winning in food, we can build frequency and trust which helps us lead more everyday customer needs. That, in turn, grows household spend with us, generating capital-light revenue streams and a richer, more holistic data set. As we combine that data with our store and digital footprint, we can build stronger and more strategic supplier partnerships, partnerships that further reinforce our ability to win in food. At the center of this ecosystem is the most connected, personalized and loved customer experience, holding everything together. Throughout it all, our purpose remains clear, delivering even better value for customers and in doing so, generating long-term sustainable growth for all of our stakeholders. Thank you all for your time today. Imran and I would now be delighted to open the floor for your questions.

[Operator Instructions]

So we'll now take our first question from Rob Joyce. Rob, please go ahead.

I might try three. But the first one, just backward looking one. In terms of last year, I think this time last year, we were thinking EBIT would come in at GBP 2.85 billion delivered to a 10% ahead of that. Can you just tell us what what went differently to expect it? How did you manage to deliver so far ahead of that would be the first one.

And second one, I guess you mentioned that the range for the era has is a lot wider than it would have been? Just to help us understand the underlying business trajectory on the 26th of February. What do you think that range was going to be? And then the final one, Ken, a lot of focus on areas that we have discussed as much before in the business outside of core food. Can you give us an idea as to the size of their contribution to the business today. And going forward, we think of those as kind funding investment in price? Or are they margin accretive EBIT growing parts of the business?

Let me just maybe take the first 2. In terms of what went differently to what we expected. Like as -- you're right, when we set out in April, we said we would make sure that we continue to protect the price position that we set out over the last 4 years and make sure that we do not see any ground on that. And we spent the money we invested and the difference is between the guidance that we gave versus what we delivered, the investment choices we made basically had better returns. We invested in price. We invested in quality. We invested in range. We invested in hours. And those things work. And I would say the proof point of that was the market share gains that we delivered landed us in volume growth pretty much every single month of the year. And that really combined with the saving problems that we have delivered the profit growth that we saw.

And what I'm pleased to be able to say to you today is I didn't start the year I think we grew profits last year and the fact that we grew profit and EPS of is a nice outcome because it's coming from market share gains. And I would say to you that's the one thing that I really love about the delivery for the year. In terms of the range, look, I mean, I'm not going to go maybe into what is the conflict wasn't there sort of situation. But what I would say to you is to give you some color on the range. Ultimately, we aim to grow our business every year, right? And we want to deliver the best performance that we can every single year as we set out to do. You see that it's safe to invest. We want to continue to gain shares. We want to continue to run our program. But there is the uncertainty driven by the conflict, as you know. And the duration and the impact of that is an unknown.

What I want to make sure that we want to make sure is if that conflict continues or if the impacts duration lasts longer that we can continue to execute the program that we have. So if we're at the bottom end to your question, that really means that we would have the flexibility to continue to do what we want to do at the upper end, it means it's the same program that we want to every year, which is gain share, great volumes and continue to do well. Ken?

Yes. Thanks, Rob. So in terms of contribution of activities outside that core food business, I think if you kind of walk through our evolved strategy. The way we described is actually the strategy starts and ends with core food and building and maintaining exactly what Imran has just described in terms of a reputation for being the best value in the industry, being the most innovative in terms of product quality, being the best for availability and customer service and then being the most convenient for ease of access. So that's really at the heart of it.

Around that, as you've seen, we have, over the last number of years, started to build additional ways of serving customers that are not necessarily core food. And they include things like pharmacy, things like our Cafe business, things like our mobile phone business, our Financial Services business, and of course, our media income and supplier services business through Don Humby. Every one of those have delivered a meaningful improvement in contribution over the last 4 to 5 years and have been meaningful contributors to profit alongside of course, market share growth, which has also been a big engine of our performance over the last 3 to 4 years.

At the end of the day, the plan is to be able to reinvest the earnings from those activities back into the core business to continue to grow and create this virtuous cycle. So that's, if you like, the kind of elevator pitch in terms of how we're evolving our thinking on strategy. There are, of course, a couple of areas and marketplace would be a good example, where we're at the investment stage of that cycle, where we're building the capability where we're creating the proposition that won't be contributing meaningfully yet to profit and may not for a few years.

And man, I guess a quick follow-up, I guess, just to understand the guidance. I guess the trading continues as we see it right now. Are we hitting midpoint? Are we going to the top end of that guidance?

Look, I mean, we -- let me keep in simple terms. So far, we haven't seen any real discernible change in consumer spending behaviors, right? We've had a good -- you see that in our [indiscernible] data, you see that in both the volume and the value share. So I feel good about how we started the year, but it's early days. And I would say to you that we aim to grow profits every single year.

We'll now take our next question from Manjari Dhar at RBC.

If you ask your question I just have two, if I may. That's the first one, I was just wondering on the upgraded free cash flow envelope. Appreciate the upgrade, but it's a little bit wider the range than it used to be. I just wanted to know the rationale for the thinking around that. perhaps connected to it given the working capital performance last year, how should we be thinking about working capital for the current year? And then my second question was just on the rollout of electronic shelf search labels.

I wondered if you could give us some color on how long that will take and how you're thinking about the savings potential that this could bring.

Sure. So let me take the cash flow number one. I feel good about the cash flow delivery for the year, close to GBP 2 billion. That's clearly on the back of the strong profit performance but also really strong working capital management we ended up delivering what is it GBP 385 million of an inflow. Think of that as beer sales performance, tight management on working capital practices. There's also a one-off EPR payment in there as well. The way we normally think about working capital and an ongoing assumption is think of it more as a normalized year being of GBP 100 million or so of inflow. So that's how I think of it. But it's a good performance in the year. It's no one-offs in there that I would call out beyond what I just said.

In terms of the range, look, after 4 years or so, we've delivered around GBP 8 billion of cumulative cash, which is nice. I'd expect us to have working capital swings every year, as I just said this year. So my view is the range is the right range for the delivery of the business. And I feel comfortable with the fact that it gives me the room in terms of working capital swings one way or the other. The fact that we upgraded, I think, is the recognition of the fact that we have confidence in our ability to leverage the strategy we've laid out to translate that into continued cash flow deliveries every year.

And then Manjari, in terms of the rollout of [indiscernible], I think we have taken our time thus far to make sure that we have the best and latest possible technology. And that means that probably over the next 3 to 4 months, we will kind of finalize what that rollout looks like. And then I would expect it to have some in-year impact in terms of better efficiency in store better price compliance and also a number of other features that these latest ECL technologies will give us in terms of better on-shelf ability better picking accuracy for our online shopping pickers, et cetera. But really, the full year effect of those savings will be felt in the following year. We don't obviously in call out the size of the savings. And what I can tell you is that they're pretty meaningful.

We'll now take our next question from Monique Pollard at Citi.

Two, if I can, as well. The first one, just on the competitive landscape. You mentioned in the statement that the competitive background remains intent. Just wondered what you're seeing from peers, conscious that 1 of the major peers that had been maybe a bit more disruptive last year is guiding to EBITDA and cash flow growth this year? And whether you could just talk a bit about how you think your pricing sits versus your main peers now? That would be helpful.

And then the second question, just on the outlook for food inflation conscious that some commodity prices are coming down, but obviously, the concern about food inflation building from the conflict and the impact that might have on things like fertilizer pricing. So any sort of thoughts you could give on the outlook for food inflation would also be helpful.

Fantastic, Monique. Thank you very much. Well, look, in terms of the competitive landscape, we started the year last year in a really competitive place from the price index versus our key competitors. And as you say, despite the best efforts of those competitors, we have finished the year in pretty much the same shape or not slightly better. So we feel really good about where we are in terms of our price position.

That said, those competitors have announced their intention to keep going. Our expectation is this will be another intense year from a competitive perspective, but we feel really well set for it. So my sense is it will be a bit more of the same, but you can count on us to stay competitive. And more importantly, to keep investing for the future as we stay competitive. In terms of the outlook for food inflation, Look, as you see that the industry and kind of things like O&S, CPI, food inflation or nonalcoholic beverage inflation has shown kind of a moderate decline, as you say, over the last 3 months. [indiscernible] is showing just over 4%. But of course, we always are well under the kind of industry headline rate of inflation because of our promotional plan and also our investment in price.

So I think for now, inflation is stable and has been moderating slightly. Clearly, we can't predict what the future is going to look like from the impact of the conflict in the Middle East at the moment. But clearly, those pressures are going to place more waste on the industry require us to be more competitive in terms of our savings programs and our commitment to keeping costs down for consumers.

I wouldn't want us to give you a prediction of what inflation will look like. But as usual, Monique, you can count on us to work very hard to mitigate that for our customers.

We'll now take our next question from Xavier Le Mene at Bank of America.

Two questions, if I may. First one is given you see some typical value product is the fact that you've got quite a lot of advertising, as I can see right now. I just want to understand the kind of [indiscernible] proposition you've got with [indiscernible] value, is it more kind of cyclical response that you've got right now? Or do you see that almost future shift going forward? That's 1 my first question. The second one, you mentioned retail media. So what should we expect from retail media in terms of profit revenues? And can you potentially give us a bit of indication of what you were able to achieve so far?

So on Tesco Value products, I think our insight was at the start of the calendar year that customers we're looking for greater certainty around those key value items that they have in their shopping basket. And as a consequence, we took our everyday low pricing mechanic from 1,000 products to 3,000 products. So a significant increase in what we would describe as branded low everyday pricing that customers can rely on. And we've seen quite a material volume uplift in sales of those products as a consequence.

Our Aldi Price Match, which is our anchor everyday low price mechanic on our fresh food lines and our own branded lines is consistent at around that 600 product level. And that's become really relied upon by customers as a kind of a value guarantee, if you like. And then, of course, we have over 10,000 products on Clubcard prices every week that are giving people deals on those kind of brands that they love. And that's working well for us as a combination. So the logic really was just the inside of more reliable pricing for everyday low prices, but the mechanics and how they work together are largely remaining consistent.

In terms of retail media, we've had a really good year on Retail Media. I think our investments in that retail platform and our desire to be the best brand-building partner for our supplier base is really starting to pay dividends. Over 90% of our suppliers have increased spending with us this year. And I think it's because they really see the value of a much deeper relationship rather than just buying ad space. They recognize the combination of the insights that we provide through Don Humby, our ability to build audiences that are a lot more tailored to them through our Sphere platform in our retail media and the investments we're making with Adobe and Kevil and others to make that whole retail experience a lot more seamless and cost-effective is really working for them.

So we feel really good about our relationship with our suppliers and ability to be a great partner with them through our retail media platform, and we're quite optimistic about growth for the coming year.

We'll now take our next question from Freddie Wild at Jefferies.

First of all, could I just understand a bit more about your leverage targets? Obviously, you've left them unchanged in terms of where you're looking for your target leverage to be and you're still well under that. Can we think about maybe the opportunity if and when markets calm down, you would look to increase leverage back to within that target range? And my second question is about where this extra capital that you're generating is going. Obviously, you get a buyback unchanged, you flagged that there may be more property buybacks coming. Is that your [indiscernible] of property buybacks over raising the share buyback? Or how should we think about maybe some of this free cash flow growth, which is coming through so strongly coming back to shareholders.

Sure. So maybe, look, on the leverage ratio, it all goes back to the credit rating and how we see the merits of a strong balance sheet. As you might imagine, especially during the last 4 years, but even going ahead into this year having a strong, I'd almost call it, a pristine balance sheet, a 2.1 leverage is nice because I would say it's a source of power, right, because it gives us a lot of flexibility in uncertain times. So I'm quite happy at the lower end of the range. Will we inch our way back up to the 2.3, probably yes, over the next few years. But so far, I'm happy with where we are at 2.1. As it comes to shareholder returns, look, it's a really important part of the equity story of Tesco, right?

Over the last -- since we started this program, we have returned GBP 4.3 billion worth of shares at an average share price of around GBP 3.17. So we've taken out 17% of the equity doing that. So you can imagine it's been a great investment for us. And I believe that share buybacks are absolutely the right way to continue to go forward. And therefore, we've announced the GBP 750 million. There's an elegance when I think about the total dividend and the total buyback in terms of using the excess free cash that we have. Then in terms of overall capital allocation and the uses of the cash, first and foremost, it will always go into the business and making sure that we invest for customers into our stores, into our distribution centers into automation to make sure we have the best possible shopping experience and the most possible setup that you would want to imagine we have, very key to continue to invest into AI and technologies and the digital proposition that we have.

And honestly, as there is excess cash and left over after any sort of property buybacks where it makes sense. Then the idea is absolutely to continue to return. I think the combination of property -- sorry, of progressive dividends and a steady buyback that people can rely on is very attractive during these days.

And we'll now take our next question. That will be from Sreedhar Mahamkali from UBS.

I'll go with three. I think firstly, Imran, I think you talked about the multiyear framework and growing profits over that multiyear period. I think in another slide, you've shown 7.9% CAGR in operating profit over the past 5 years. Is that somehow an exceptional level of profit growth that you can't repeat over the next 5 years? Obviously, barring any sort of external shocks such as the one that we probably are seeing now.

Secondly, I think -- you've said you haven't seen any impact from sort of customer point of view from the conflict. Is there anything creeping into cost lines in any meaningful way? If you could talk part, that would be great. And maybe just on free cash flow and capital allocation, very small one really. I think Imran, I think you referred to inorganic growth opportunities. I'm keen to understand what that is?

Yes, sure. So look, you point out to a very strong performance over the last 4 years. And as we just presented, we're pleased to see that. I'd say to you, the way I think about laying out the strategy this morning or the evolved strategy, what -- the way you should take that is, it is renewed confidence that we can continue to deliver what we said we would do. And what we said -- what we said we would do from a performance framework is very clear, right? We'd say we aim to hold or gain share every year. We want to, therefore, grow the profits every year. we want to make sure we have the buybacks as part of that and therefore, deliver a nice EPS growth every year as well. And ultimately, as a proof point, translate that into the upgraded cash of GBP 1.5 billion to GBP 2 billion. Every year is going to be slightly different in the sense that the circumstances as this year is a really good proof point is going to be different. And therefore, we set out guidance as we have.

In terms of cost lines, look, I think the thing that I'd point out to you at the moment, obviously, fuel prices, energy prices have gone up. as they relate to our own operating cost expenses, it's not going to be a big headwind because of our hedging strategy protects us from that. But clearly, we have to wait and see because it's early days and the stresses and the duration and the implications of the conflicts will obviously have an impact at some stage. And hopefully, we can minimize that as much as we can by the safety investment program that we put in place. Then in terms of inorganic opportunities?

Well, look, I think as always, Sreedhar, we have through, as you saw, the evolved strategic kind of 5-Point Plan laid out desire to drive core food performance, but then to meet progressively more everyday needs of customers as we build out that ecosystem as we get more personalized through the power of the Clubcard and as and when we see opportunities to bolt on other kind of everyday needs that could enhance or improve that customer experience or give us more -- give people more reasons to come and shop with us, then we will always keep an eye on that.

And on property buybacks to give you a sense, right? I mean when you have a strong balance sheet, the ability to buy back your strong properties than own them in your portfolio and then avoid future inflation is no bad thing. It's a really good use of cash.

Just to follow up on what you said, Imran. I think it's something Rob touched on earlier already a little bit. The assumptions you're making, especially at the lower end of GBP 3 billion. Is that an assumption of the conflict last through the 6 months of the year?

No, I think -- look, I mean, the way I think about it is it's not just the duration, it's sort of the consequences, the implications. And those are so hard to judge because it's such a moving fees. So I don't really want to speculate. And all we were trying to do was to say, well, I mean, the conflict could have certain implications that changed consumer behaviors shopping behaviors. We haven't seen that yet. It could have an impact on the U.K. economy. We haven't really seen anything yet that has influenced shopping. But look, if it does, we want to have the flexibility to continue to execute the programs we've built in because it is those programs that continue to allow us to win market share and grow this business.

We'll now go to Clive Black at Shore Capital.

Thank you for the presentation and also happy to [indiscernible] on fabulous delivery. A few points, if I may. First of all, be, I think you said that your average buyback price was GBP 317p. I just wondered at GBP 485p whether needs to be thought about it in a slightly different way, maybe more akin to Sam Wilson, your thoughts would be much appreciated on that. And then fascinating to hear Ken, your thoughts on where the business is going, particularly around being connected. Firstly, I just wondered if you could maybe drill down to what you think a patient shareholders. I understand all your stakeholders that you must and are supporting. But what do you think it actually means for shareholders?

And I also just wanted to drill a little bit deeper in the importance of Dun Humby to your business as you raised today, especially is something that's quite proprietary and exclusive. Again, what do you think that delivers for shareholders.

Look, on the buyback price, the way I think about it is any use of cash, Clive, that we have, whether it's CapEx, whether it's the buyback in this example of properties, discipline and making sure it has a good return. And it's a good use of cash is the first question we ask ourselves. So as we look at buybacks, of course, we have -- and we look at year [indiscernible], if you wish. We look at the intrinsic value of the business. We look at the situation. And I'm very confident that the buyback continues to be an excellent use of cash.

So in terms of the kind of evolution of our strategic thinking and what it means for shareholders, and I think it's linked a little bit to how we set our stall out in 2021, where we said if we look after all of our stakeholders, then we will build a strong, sustainable business that will be good for shareholders over the long term. I think that's proven to be the case. And it's absolutely our ambition looking forward for the next 5 to 10 years. I think we, as I said earlier, have an ambition to maintain market share growth in our core crude business. We think that's absolutely critical to the success of the company. So our strategy starts and ends with our core food business. We're going to keep investing in price, keep investing in quality, keep investing in our supply chain, so we can be the best providers of fresh food in the contrary.

But a link to that. And I think these are some lessons we've learned from the past, Clive, is that we are looking in a capital disciplined, capital-light way to leverage those assets, use the infrastructure, both the physical infrastructure, but also our Clubcard proximity to customers to really start to build out other reasons why customers might shop with us, whether it be financial services, marketplace, quick commerce, phone contracts, fuel, whatever it is, such that we can create additional revenue streams that then get reinvested back into driving core food performance, building market share because as we know, food is the most frequent retail purchase, and it drives that glue and that connectivity with customers, which is so essential for building trust and being able to be relevant for other shopping missions that they might have.

The key, though, which Imran is very strong and it has to be done in a capital-disciplined way. And within our financial framework that we also settled onside our strategy. So I think what shareholders will see and can expect is a very ambitious strategy that will maintain top line growth, a very disciplined approach to capital expenditure that will mean we'll be sensible and look for high returns. And therefore, we will maintain strong cash, very healthy balance sheet and keep returning to shareholders, but only after we've made sure customers are happy, colleagues are happy, and we have strong supplier relationships with our suppliers.

And so just Dun Humby, Ken, just a word.

So Don Humby, for me is a bit of the intelligent engine of the business, right? It is designed to harness the latest technology, whether that be AI or our own data science capabilities internally in Dun Humby to understand how do we optimize how we think about all of our category management decisions how do we optimize our customers' decisions in terms of personalization and getting closer to them? How do we become the best brand-building partner for our branded suppliers through our end-to-end retail media platform, but also all of the additional kind of components we're building on to that in terms of helping them with their innovation pipeline, the go-to-market strategies, et cetera. and then helping with things like personalized ranging.

So we're looking to use the data science to get a lot more specific about our ranging in our individual stores to be more relevant to that local demographic. So just some of the examples of [indiscernible] Dun Humby is really helping the strategy.

We'll now go to William Woods from Bernstein.

The first question is on market share. You've obviously gained a lot of market share over the last few years. what you like the next 3 to 5 years, where do you think you take share from either formats, categories, channels, regions, et cetera? And then the second one is, if you look at the back of the history, one of the test goes down for over the last 15 years was getting distracted by other things, banks, garden centers, coffee shops, et cetera. And now I suppose we've seen a reasonable shift in your tone from focusing on food to things like retail media and clothing and marketplace.

How do you ensure the problems of the past don't reoccur. I'm not necessarily been thinking about CapEx, but more about the culture of how you're running the business in terms of people focusing on food.

Look, I think the first thing to say is that the market share gains we achieved over the last number of years have been quite broad-based. They haven't come from one source. And I think they've been underpinned by the fact that we've made massive investments in value, quality and availability over the last 5 years and we're keeping building our infrastructure, building out capabilities like quick commerce, et cetera.

That means we're more relevant for more shopping missions more often with customers. And that's working really well for us well. So I think the first thing I'd say is that, that momentum will continue. As Imran just said, we have a very strong balance sheet. We have a very strong efficiency program and our commitment is we will keep investing in the core. So the one thing I wouldn't want you to think somehow is that we're all is distracted running after shining new things. Our core safe to invest program of over GBP 0.5 billion a year is almost entirely invested back into the core business. And we're using some of the gains from market share gains and some of our new income streams to reinvest back in those activities that I just mentioned that are strategically important.

But as I said just a moment ago, it starts and ends with our core food business. The whole objective of the strategy is that through our success in core food, we're able to, in quite a capital-light way in a connected way. And so if I give you a very classic example of, say, marketplace or other things, Historically, Tesco Direct was set up in an entirely separate platform with a separate [indiscernible] systems with a separate website, it had to generate all of its own customer acquisition and traction because -- but in the case of marketplace, it's completely integrated into the Tesco app. It is seamless for customers to access it when they're doing their regular shopping as is, by the way, Wush. So if you want to go and do a weekly shop, but you need it in half an hour, that capability is available for you on the same app.

So we're using all of our core assets and our traffic to drive people into the enhanced set of propositions that we're building. And I think that's the key difference of lessons from the past. And we've been quite disciplined about it will. I promise you we obsess as much about the price of carrots and whether we've got availability of raws and movers on the shelf as we do with how is F&F and marketplace doing. I can promise you that.

If I could add maybe 1 or 2 just nuggets as well from my side, Will. It's clear that when you look at the return on capital employed over the last few years, over the last 4, 5 years, of this business, right? We've nudged up CapEx because we've been reinvesting into the business and expanding the business. But at the same time, the return on capital employed has also improved steadily year-on-year. And I think that's a nice proof point that where we spend the money makes us a better business. The other angle I'd like you to think about is it's clear that when you have a market share in online of around 36%, 37% depending on when you measure you have a massive asset and you have to continue to look about where do customers spend their time and where do they shop?

And the fact that personally, I love the fact that we're being able to leverage the strength online that is unparallel to anyone else in the industry, to provide F&F online to provide marketplace to provide a wish to provide media income opportunities for our suppliers.

So it is all in gift of making sure that what we've got is actually maximized as well and that's why it is capital light.

We'll now take our next question from Ben Zoega at Deutsche Bank.

I just had one follow-up on the profit guidance and perhaps 1 on cost savings. So firstly on the profit guidance, is it fair to assume that this range is really about uncertainty around demand and the response that households and to shift their behavior rather than uncertainty around cost pressures. Then secondly, on cost savings. Just within that GBP 500 million target, could you talk a bit about the main buckets and opportunities you see within that [indiscernible].

Yes, sure. So on the cost savings, to take that 1 first. Look, it's an always on program, right? So when I think about it, the way I look at it, it's simplifying how we work. It's taking out inefficiencies, so waste management, transportation, automation in warehousing and distribution, better buying of services, you know, leveraging our shared services more, simplifying in-store logistics, leveraging AI to optimize forecasting to optimize promotions. So I feel like it's all in, it's what we've been doing, and it's working well for us. And as Ken said, we use that to reinvest back into the business and manage our own OpEx in a nice way.

Then when it comes to the guidance, look, it's very clear that when you think about, I assume when you say cost, you mean energy costs, our energy costs are sort of -- given the hedging we've taken, we're in a good place on avoiding any ups that are unnecessary for us.

So I think we're in a good place there. It really is about putting -- trying to put sort of a wider range of because of the uncertainty as to the implications on what happens to consumer behaviors, what happens to the wider economy at large. It's hard to call and this is really just making sure that at the lower end, we've got the flexibility in case we need it to continue to do what we've been doing, which is win.

We'll now take our next question from Matt Clements at Barclays.

Two quick questions if I can. One on IMS, which was a strong contributor to profit and seems to be outperforming your initial expectations. How should we think about IMS profits going forward? And the second question, just kind of extending your comments around strategic ambitions to maybe touch more on Booker and Central Europe within those comments? Where do they sit? And what should we be expecting in the medium term for those businesses?

So I think the IMS. Look, on IMS, you're right, it's done a fabulous job, and I'll be honest, better than I was thinking. So when we laid out the what we were thinking we said it would be around what, GBP 80 million to GBP 100 million a year was the profit number we gave. And I think now the way I think about it is this is at GBP 167 million. So that GBP 160 million, GBP 170 number is a good number. That's sort of where my head's at on that front, which is nice, given we got rid of the riskier credit book, but actually retained the business that we wanted to retain and frankly, now make as much money as we did before. So that's good.

Thanks, Imran. So on the strategic ambitions, I think that I would say a couple of things. First of all, starting with Central Europe. Central Europe is clearly a Tesco retail business. all of the innovation and investment that we do in Tesco U.K., around technology, AI, grocery home shopping capability, quick commerce capability, just simply transitions into our other businesses. So Ireland, for example, get the benefit of all of that technology, and it's been a real driver for them of market share growth in Ireland, where it is by a country mile, the leading online shopping experience, and we've just launched Wush there in the last 12 months, and it's growing very strongly. So it's a similar story for Central Europe. It's a business that obviously is operating in challenging countries from an economic and geopolitical perspective, but benefits from the the kind of the innovation that's happening centrally.

So that's how I would describe our Central Europe and Ireland fit into the context of the strategy. In terms of Booker, book is really interesting. I mean, Booker growth on the top line may not look that spectacular, but actually, it's underlying growth in terms of its catering business and its independent retail business pretty strong. and particularly against the market is growing quite well.

And that is predicated on being the leading value wholesaler in the country, being an innovator around food development. So very similar to the core strategy in TESCO and increasingly looking to benefit from our thinking around that broader ecosystem thinking. So this year, Booker are going to be investing more heavily in the digital experience, particularly for its catering customers, looking to be ever more relevant and helpful in terms of how caterers can run their businesses and deliver a great experience for customers, but also make some money.

And as we think about the long term, of course, Booker gives us access into hundreds of thousands of outlets, food outlets around the U.K. that mean we can be relevant for every food and food-related experience in the country, which is kind of an overarching ambition, if you like, of the strategy. So we see Booker quite core to the overall strategy. But clearly, it needs to continue to win in its core wholesale market, which it is doing at the moment, and I believe we'll continue to do for the future.

And maybe one bullet to add on that as well is 1 of the features that both of them have in common is they have really got really strong cash generation properties. So they are really, really helpful from that side as well. So it's not a bad formula to have to generate the cash and reinvest.

We'll now take our next question from Francois Digard at Kepler Chevreux.

A few points, if I may. The first on volume price balance in '25, '26 of its evolution during the year. Could you share with us how it has evolved and how you see the balance in the coming year in the current year side? Second point on the fresh product growth, it grows faster than the rest of the food. Does that benefit from the Tesco Finest restaurants or is it a different scope what can you tell about the margin of fresh products? And finally, do you expect any impact of fuel price increase on your working cap during the year?

So if I take the volume price balance. So in terms of the way you should think about it is the world panel number of inflation throughout the year has been between, what, 4%, 4.5%. We've been below that every single quarter, every single month, and we've been in volume growth every single month of the year as well. clearly, what we did benefit from in the first half, you would have seen Francois, it was a very, very hot summer, and it was brilliant because people were out about enjoying themselves. I look out the window, and I wish there was a bit more sun. It would be good to see. So we'll have to wait and see how it plays out. And as you know, inflation given the uncertainty be wrong of me to give you a full sense of precision at this early stage, and I don't want to speculate on that. We'll see where that lands. What I would say is we'll continue to make sure that [indiscernible] safe to invest, we continue to protect our price position.

In terms of fresh product growth, Francois, I would say that the balance of it is a mix. I think absolutely, Finest has played a role. It's been a fantastic added value proposition for us. We've doubled the size of the brand over the last 3 to 4 years to make it now a GBP 3 billion plus brand, and we've got ambitions to grow it even more in the coming years. That said, our fresh core product has performed incredibly well. And this has been a combination of really close working relationship with our growers and suppliers on fresh produce and some great innovation in some of our meat, fish and poultry categories. So an example would be our Steakhouse range, which has been a phenomenal success with customers and shown us really growth and added value growth.

So to your point around margins, we have seen a modest improvement in margin mix over the last 12 months in fresh, driven by a combination of a lot of work on efficiency, but also some great success in our added value ranges such as Finest and Steakhouse range. Imran, do you want to pick up the working capital point on fuel?

Yes. Look, obviously, the way I think about working capital at the moment in terms of fuel is it's so unpredictable. Clearly, when it moves up, it's favorable. When it goes down, it's unfavorable. So when I looked at the year we just closed, there was actually a bit of a negative because it had gone down. What will matter is where it is before half year and before year-end, but we'll keep you posted. But clearly, given the working capital cycle on fuel, it can be a benefit.

We'll now go to the telephone lines for our next question, which is going to come from Karine Elias from Barclays.

A lot of them have already been answered. But just going back a little bit, if I may, to the competitive environment. Obviously, despite some of your competitors embarking on investments last year, albeit they did have some issues specific to IT for some. Would you still maybe describe the environment as being rational to a certain degree? Or do you feel that anything has changed? And then my second question was really more on the convenience. Some again have talked about how convenience was struggling on the back of weaker tobacco sales. Yours have done much better. Maybe if you can expand a little bit on that would be helpful.

Thanks, Karine. Look, I'd start by saying that the market is and always has been intensely competitive. And at any given moment, you have a number of competitors making moves and attempting to take share and win with customers. It's what makes this business such a fantastic business. It's never a dull moment. And I think we can expect that to continue. That said, I think such are the cost pressures the industry has been facing over the last number of years between energy issues, commodity issues, regulatory and tax issues that has forced a certain amount of rationality in the market. So what I would expect the coming year to be is largely the same, is a very intense competition for the shopper basket, but there's certain rationality driven by the need to combat cost and maintain control over those cost pressures.

So that's how I would kind of describe the last few years. That's how I see the next 12 months as well. On convenience, I think that you're right, we have outperformed the market on convenience. I think a lot of that is down to the fact that on the top 100 essential lines, our convenience stores are the same price as our large stores. So we are a strong value proposition in convenience in relative terms. I think the second thing to say is that we are -- have a greater fresh penetration in our convenience stores, and that's worked well for us as well.

And the third thing to say is that, of course, our quick -- we're the only major retailer that have real critical mass in our quick commerce proposition through Tesco Wush, which will be a GBP 400 million business this year. And that has also helped a lot in terms of driving our convenience business. So I think those factors will continue to help us as we go into the coming year.

We'll take our last question for this morning from Rob Joyce of BNP.

Very quick one. Just in terms of the shape of the EBIT you're expecting for the year ahead, anything you'd flag in terms of differences versus FY '26?

The one thing I would flag is maybe the fact that lapping the hot summer, that's clearly going to be a thing. But we'll wait and see how it all plays out because that uncertainty thing is still something we need to work through as you can appreciate. But look, last year, we were close to 5% growth top line, driven by the strong volume growth and the hot summer. Let's see how it plays out.

As an Irish man, you never thought you'd hear me say this, but we're really hoping England and Scotland do well in the World Cup.

I've got on video now.

Okay, Ken. So that wraps up the questions for this morning. So just back to you for your closing remarks.

Listen, I would just like to thank everybody who's joined us this morning for taking the time to listen to our presentation and for all the excellent questions we had. As you can see, we are consistent in our messaging. what you saw this morning was an evolution of our strategic intent and our commitment to keep focus on our core business, delivering great value great quality and consistent high standards in our stores and in our online proposition despite whatever the environment might throw at us over the coming months. So thank you again, and we look forward to seeing you all early in the summer.

Good morning, everyone, and a very happy New Year. Thank you for joining us today for our quarter 3 and Christmas trading update. As usual, I'm here in Welwyn with Imran, and I'll start with a brief overview of our performance before opening the line for your questions.

We are delighted with the way the customers have responded to our continued investments in value, quality and service. Group like-for-like sales grew by 2.9% over the 19 weeks, including 3.7% growth in the U.K. Customer satisfaction improved, and our U.K. market share is at its highest level in more than a decade, following 32 consecutive periods of gains.

We set ourselves a challenging plan for Christmas, and we delivered in line with that plan. With over 2 billion products going through our tills and more than GBP 6 billion of sales in the 4 weeks to Christmas Eve, our teams right across the group worked hard to deliver the outstanding service that customers have come to expect from Tesco. I would like to start the call today by saying a huge thank you to them for delivering a Christmas we can all be proud of.

Our performance builds on last year's successful results and reflects the strength of our core food offer. In a highly competitive market and with customers looking to make their money go further, we saw particularly strong growth in fresh food with like-for-like sales up 6.6% in the U.K. Running alongside familiar festive favorites, we launched 340 new and improved own brand Christmas products, including 180 in Finest.

We recognize that for many families, the cost of Christmas can be a stretch. We did everything possible to make sure our customers got the best value from us. Starting with our fresh Christmas dinner for a family of 6 for under GBP 10, and just GBP 1.59 per person, it was even better value than last year. More broadly, our rate of inflation eased through the Christmas period and continues to be materially behind the market.

We also invested in making the Christmas shop even easier for customers, including hiring over 28,000 additional colleagues. And with support from AI-powered scheduling tools, we offered more than 100,000 extra online delivery slots in the week before Christmas. Through better forecasting and planning, AI also helped us to deliver best-in-class availability and to optimize deliveries across our network.

Customers continue to embrace Finest with sales growth of 13% in the U.K., including a 22% increase in our Finest party food range. Highlights included Christmas center pieces such as our Finest Turkey Crowns and Chef's Collection Beef Wellington as well as our curated Finest gifting range and a long list of award-winning products. We sold around 21 million Finest pigs in blankets, along with 2.5 million bottles of Finest Prosecco. We also saw strong demand for low alcohol options, including selling almost 0.25 million bottles of Nozeco. While Turkey retained its popularity, some customers opted for other meats this Christmas with sales of beef joints up 29%, making it the most popular alternative.

Online remains our fastest-growing channel with growth of 11% across the 19 weeks. It was our biggest online Christmas, including our 2 busiest days ever. In the week leading up to Christmas, we delivered on average 2 orders every second. Whoosh also performed strongly with sales up 47% and more than 0.25 million customers trying it for the first time. Both in-store and online, customers benefited from additional value through Clubcard. Alongside thousands of Clubcard prices per week across a broad range of family favorites, we offered customers more personalized rewards, including gamified experiences with Clubcard challenges. Our retail media offering continues to engage customers and brands, including the return of sponsored Christmas Gratis now in their third year. The Tesco Media team continued to make great progress, and we were delighted to be named Media Brand of the Year at the Media Week Awards.

In Ireland, we built on last year's strong performance and are now in our fourth year of market share gains with fresh food continuing to lead the way. With 5 openings in the period, including 2 large stores, we now have 190 stores in Ireland. We continue to roll out Whoosh, which is now available in Dublin, Galway and Cork. Booker performed well despite challenging market conditions, with increased customer satisfaction scores in both core catering and retail. Our wine and spirits specialist, Venus, continued to win new business. And in our symbol brands, Premier opened its 5,000th store.

In Central Europe, our targeted price investments contributed to growth in both food and nonfood across the period despite a backdrop of subdued consumer confidence and increased competition. Value continues to be a key priority as customers seek to make their money go further, and we're determined to do everything we can to help. Earlier this week, we launched a new commitment to Everyday Low Prices on over 3,000 branded products, alongside our existing Aldi Price Match on more than 650 lines and thousands of Clubcard prices.

Our strong performance this Christmas gives us the confidence that group adjusted operating profit will now be at the upper end of the GBP 2.9 billion to GBP 3.1 billion guidance range that we issued in October. We continue to expect free cash flow within our medium-term guidance range of GBP 1.4 billion to GBP 1.8 billion. So as we move to your questions, I just want to say another big thank you to all our colleagues for everything they did to help our customers to have a brilliant Christmas.

Thank you all for listening, and I'll now hand back to Sergei.

[Operator Instructions] Our first question is from Rob Joyce from BNP Paribas.

So the first one, Ken, you referenced the easing food inflation over Christmas. Was that the entire driver of the slowdown versus 3Q? Are we seeing any sort of broader volume slowdown in the market? And do you think the overall market stepped down over Christmas? That would be the first one.

And then the second one is probably a bigger question, but clearly guiding to a broadly flat EBIT this year after strong top line performance. What do you think needs to change for you or the market for you to be able to return to profit growth?

Thanks, Rob. Happy New Year. Two great questions. Look, I think definitely, the very strong trading plan we put together contributed to the drop in the kind of overall market growth. And therefore, the easing of inflation was a material factor. There was also a step down in volume, even though we outperformed the market in terms of our volume growth, and we're really pleased with that consequentially. So I would say that our performance was pitched exactly right. It was an aggressive trading plan, but it was complemented with a fantastic product innovation pipeline and really consistent execution, both online and in stores. So for us, it's been a really pleasing performance.

In terms of -- you're right, the guidance is broadly flat year-on-year. I think that's an exceptional performance if you think about where we started this year and some of the competitive activity that we responded to. What I'm really pleased about is how decisively we acted and how we got on the front foot and delivered very strong market share performance consistently across the year. And what's particularly pleasing, Rob, is that we didn't stop investing in the future. So we've been making substantial investments in our store estate, substantial investments in automation to keep our savings programs going, and even more importantly, making substantial innovation, investments in technology for the future. And so we've got a very clear strategy. We believe in the long-term possibilities for this business, and we're quite confident for the future.

And maybe if I could just add maybe 2 bullets from my end as well, Rob. Two things on the ability to upgrade the outcome for this year and continue to invest to continue the momentum and continue to protect the position of strength that we have, I think, is not a bad place to be.

The second thing to your sort of longer-term question, it's important to go back to the performance framework that we did set out almost 5 years, and we really stick to, which is we are very clear that we want to continue to drive up customer perception, to drive up market share, which in turn drives up profit and drives up cash. And I think you've seen us do that year in, year out. I think this year was an exceptional year with an exceptional reaction to a competitor, but I think we stuck to our guns. We invested into the proposition. We invested into price and truthfully, being able to upgrade is a nice feeling, because it demonstrated that everything we've done really worked out well.

And just a quick follow-up on that inflation point. Do you think -- is the inflation then more -- the slowdown more driven by your own investment in price relative to your sort of input costs? Or are you seeing input costs falling more broadly? And does the kind of -- I'm just looking at next year and thinking people have got -- markets got Estimates U.K. growing above 3%. Does that look a bit ambitious given the Christmas exit rate?

Look, let me take first the Christmas specific question. Look, Kantar calls around an inflation of around 4% or so, slightly north of 4% over the Christmas period. As Ken just said, we made conscious choices to invest. There's no other time when you've got so many customers in your stores and you build momentum. And if you look at our market share gains, our volume market share gains were even stronger than our value market share gains over 12-year records. And I think you get -- that pays back as you then go into Jan, Feb, March and April into the next year. So I'd say to you, it was a conscious decision to invest into value, which we saw pay off in the market share.

Then in terms of next year's outlook, you know as well as I do that inflation is a driver of commodities as much as it is of stickier costs on payroll. All of those things are still to be worked out, and we'll see where we land when we talk to you in April.

Our next question comes from Xavier Le Mené from Bank of America.

A quick one actually on the market share. As you said, you've got the strongest market share ever for the last 10 years. But where potentially do you see your peers? Do you still think that you've got opportunity to grow your market share? Or are you more in a position to defend what you've got right now?

So Xavier, we are always thinking offensively rather than defensively. That's our mindset. And we see it less about the market share per se and more about are we doing the right things for all our stakeholders and particularly our customers. So are we getting our value right? Are we getting the quality of the proposition right from a product point of view? Are we getting our execution right? And are we innovating and thinking about the future in ways that customers' trends and needs are adapting. And that's really where we focus all our energy. And then we look to market share as a measure of how successfully are we executing against that strategy. So we don't see any limits in terms of where we can take market share, but it is not a given. It's something that we have to work very hard to achieve.

Right. And just one follow-up on actually Rob's question. Sequentially, you said you've seen a bit of a slowdown. It sounds like it's also market driven, but do you expect the slowdown to continue heading to '26, or do you think that potentially it's more a question of consumer confidence and hopefully, U.K. consumers getting a bit better going forward?

Look, I mean, I think when I look at consumer confidence this year, I would say it's mixed. But it's been mixed throughout the entire year, right? What you saw was people that are -- there's a cohort of groups that are, frankly, in a good place and feeling comfortable with their savings and their spending, and there's a group of people looking for value. I feel we saw that reflected. When you look at Finest's performance, in a way it's a reflection of the fact that people looking for value and quality at the same time were able to hit that. So I think our Everyday Low Price campaign that we're launching, again, hits the bull's eye on that.

I think addressing all of those opportunities for those customers looking for value is the right way to go forward. Fair to say that as you -- the question behind the question is, was the market overall a bit softer over Christmas? I'd say yes, on a volume basis. The reality, though, also is because we really outperformed every single month over the last 19 weeks on a volume share basis, we were not really affected by that. And I think one proof point for me is the way we exited the year was very clean on stock. Then how it plays out next year, we'll obviously talk to you again in April. But look, one of the things that we do feel good about in this business is, and I think we've demonstrated that over the last 5 years is, we are very good at adapting ourselves to whatever the environment throws at us. And it's one of the reasons why we've put value at front and center of everything we're doing.

We'll now take our next question from Manjari Dhar from RBC.

Just 2 questions from me, please. My first question is on supplier-funded promotions. We've seen them picking up over recent months. Just wondering how much higher could this go? And if it does continue to drift higher, does that change your approach for the Tesco business, maybe for your private label business?

And then my second question is on the digital data opportunity. I guess how much further is there to go with Clubcard personalization and AI? And what sort of things should we be expecting this year?

Thanks, Manjari. So I would start off by saying that kind of supplier-funded promotional penetration or participation is actually only returning to what it was pre-COVID. So it's not like it's wildly out of kilter with historical norms. That's the first thing to say. The second thing is that actually, as you saw from our announcement this week, we have reinvested a lot of promotional funding back into everyday low pricing through the extension of our low-price campaign from 1,000 to 3,000 lines. And that really is based on an insight from customers that say they need reliable low pricing during these months where money is tight and they're watching every penny. And so that is the first signal, by the way, that we are kind of -- we are responding to customers' needs in the moment. So I'm kind of relaxed about that, if you like. I think it's a normal...

And maybe to give you a number on that, just to give you a sense to underpin Ken's point, last year's promo percentage was around 33%, and this year was 34% over that 19-week period, which gives you a sense. There was a slight creep up, but not massive.

Yes. It was artificially depressed during COVID, Manjari. So it was very hard to compare apples with apples. If I go to your second question, which is a very exciting question. It's a question we're really excited about. We don't see any limits to the opportunity around data and particularly the opportunity to serve customers better through data, getting to understand their needs better, responding much more dynamically, using AI to help us be there for customers whenever they need us. And we're investing behind that, and we'll continue to do so. And I think it will be something that you'll see continuous improvement from us over the next number of years. I think there's infinite possibilities.

Great. Maybe just a quick follow-up. Should we be expecting investment levels behind that overall group CapEx to slightly step up now as a result?

Well, we've always been quite clear about our kind of breakdown of CapEx being kind of a 3-part logic, which is part 1 is where we're investing in our core estate renewal and the shopping experience. Part 2 is where we're investing in automation to support our Save to Invest programs, and Phase 3, which is all about innovation, technology investment for optimizing our proposition. And probably the greatest -- we've seen step-up investments across the board actually in all 3 areas. And that's been what's been behind our progressive increase in capital. And actually, as we've gone, we've kept a very close eye on return on capital employed, and that has also been improving over time. So we're very disciplined in how we spend our money.

Yes. And also what's really nice is, in the base, we've also reflected already increases year-on-year into our tech organization, because we know that this is an area of opportunity for both on the growth side, but also on the efficiency and savings side.

We'll now move to our next question from Sreedhar Mahamkali from UBS.

Maybe 3 for me, if you don't mind. First one, in terms of improving price position versus the market statement and the comment in the statement, can you talk to us if it's been the case versus all operators as you see it, especially given one of your big competitors reset and continuing investment? That's the first one.

Secondly, just trying to understand the new or renewed push on everyday low prices. A couple of questions there. Is this reallocating the promotional funding more to be fully behind Everyday Low Prices versus Clubcard Prices? How do you see the offer to the consumer changing in the round as a result of what you've been executing really well on Clubcard Prices already?

And second one, sticking with Everyday Low Prices, is this first signal to us that 2026 is likely to be as big a year of investment as it was in 2025? Is that how we should read this?

Okay. Thank you very much, Sreedhar. I think I'd start off by saying that our price position has strengthened over the year versus the market generally. And that I think more importantly, the sophistication of our pricing investment has improved through the technology investments we've made such that we focus on the lines that matter most to customers. So we're investing in value, but we're investing wisely and quite judiciously. And I think that is what has helped us to outperform the market.

On your point around Everyday Low Pricing, I think that was a response to customer insight, which said they wanted more reliable pricing on everyday essentials in these key periods in January, February. And so we made a long-term commitment to, as you say, invest principally promotional funding back into Everyday Low Pricing. And you shouldn't read it as any more than us responding to a customer insight to give customers the best possible value in these early months of the year. And I don't think it's a signal of anything other than our intent to stay on the front foot from a value for money point of view in 2026.

Yes. I think one aspect, Sreedhar, that's important is we already have Everyday Low Prices on 1,000 SKUs. And what we're doing is because it worked so well, we're giving it more visibility, more color, and it's been expanded to 3,000 of people's favorite brands in the country. So from that level, it's also a confirmation of something working really well that we want to double down on -- or triple down on, I should say.

And in the round, I guess what I'm trying to understand is Clubcard Prices have been incredibly successful for you. Is this a recognition, to Ken's point, I guess, some of that needs to be more upfront shelf prices rather than Clubcard Prices. Is that how I should see it?

I mean, I think it's a continuous conversation depending on what customers are looking for, but I'd be very comfortable to say to you that as opposed to having only exclusive deals on Clubcard prices, we want to have more, as Ken said, more longer-term price fixes as we've been doing on Low Everyday Prices now rebranded.

We'll now move to our next question from Clive Black from Shore Capital Markets.

Also, very happy New Year. Very well done, by the way. Not an easy thing to deliver. The question I have is really around volume. First of all, why do you think volume in the Christmas period was a bit slower than you and maybe the industry expected? And in particular, do you think there are features around alcohol consumption and maybe diet suppressant drugs that are starting to kick in more noticeably in that respect? And then in terms of that volume, is that a key factor why you expect working capital -- or sorry, your free cash generation to come in with the existing guidance, which might mean that working capital is a bit of a flatter benefit year-on-year? Would that make sense?

Clive, Happy New Year to you too, and thank you for your comments. I'll speak to the volume comment, and then I'll pass over to Imran maybe to talk about working capital. So I'd start off by saying that what was particularly pleasing about our performance is we outperformed the market on volume. I think it's fair to say that the market overall was a little bit softer on volume, but our outperformance was particularly important. And within that, I was particularly pleased with our fresh food performance.

So speaking to your point about is there a little bit less alcohol consumption, is there an impact? I think there's a general impact from people wanting to eat and live more healthily. And for sure, within that, GLP-1 will be having an impact. But our fresh food sales at plus 0.6% were particularly strong. So my feeling is that whatever way this trend evolves, we're really well set up to take advantage of it. And we've been investing very heavily in our fresh food proposition over the last couple of years, and it has been the principal driver of our business, which we feel really pleased about.

There's no doubt, as you saw from some of the stats that I shared on the call earlier that you are seeing a significant rise in low and no alcohol sales, but we respond to that as well. We have the products and the range to address it. And within our food range, we have a high number of high-protein products that are really well-suited to anybody looking to pursue that kind of diet. So we feel really well set for whatever trends are coming our way. But for sure, trends are emerging and we are keeping a very close eye on them.

Sorry Ken. Just in that respect, Ken, are you therefore seeing -- sorry, are you seeing notable step back, therefore, in areas that are more exposed to change in ambient carbohydrates and the like?

No, not really. I mean, we shifted an extraordinary amount of chocolate tubs over the Christmas period. So I think -- and I was a material contributor to that personally. So no -- the short answer is no, it's been really strong.

Sorry, Imran?

Yes. No, absolutely. Just on your second question, I mean, just to reiterate what Ken just said, I mean, we -- and how it impacts cash, I mean, obviously, we were less affected by the market slowdown because if I look at Q3 and the Christmas period, we were growing volume every single month and outperforming on market share every single month. So that gives you a sense of it not being a real driver on working capital, because ultimately, volumes are positive. And more pleasingly, I could say that we're exiting very, very cleanly. Actually, I was very happy about that. I mean, we set up a very ambitious Christmas, and we delivered in line with that. And when you exit cleanly, it just helps you get momentum also into January, which is nice.

In terms of cash flow, look, we had a very, very strong first half, over GBP 1.6 billion. As you know, typically, our cash flow is skewed towards the first half. And in the second half, you've got the payments out the door from all the supply you bring in for Christmas. So that phasing will play itself out as per normal. And as you know, our guidance on cash is that consistent range we've been giving, GBP 1.4 billion to GBP 1.8 billion. I know we've delivered always to the upside on that one. And so it's never stopped us from doing a good job, and the plan is to continue to do so. But as you also know, the working capital balances at Tesco are enormous. So just to give us a bit of flex in terms of any last-minute payments or receivables or anything like that, it gives us a bit of space to do that. But obviously, cash is important, and the plan is absolutely to continue to deliver within that range.

Our next question is from Monique Pollard from Citi.

Two from me, if I can. The first one, obviously, good market share gain, U.K. market share gains of 31 bps over Christmas. And from what I understand from the commentary from Imran, the volume market share gains over that period are even stronger than that. What I'd like to understand from customer feedback, the surveys you do, et cetera, are you able to give us some sense of how much of that you think is due to strong price positioning? And you mentioned your price position has strengthened versus the market this year, and you were aggressive in terms of inflation over the Christmas period. So how much of that is price positioning? And how much is things like investment in availability over Christmas, which is probably particularly strong versus particularly some competitors over the period and things like the store estate, staff in stores, et cetera, over that period?

And then the second question is just me trying to understand that level of price investment that you've put in, whether some of that was seasonally specific to the Christmas period. As you mentioned, you never get that volume of customers in store and therefore, important to be on the front foot on price, or whether that is sort of something we should expect to be a bit ongoing?

Right. Monique, so I think the short answer to your first question is that delivering the kind of market share performance we've delivered, not only over Christmas but right across the year, is actually a composite of great value, great quality, great execution. I think you'll have seen amongst some of our competitors that even if you drive a very strong value message, if you don't have the quality and the supply chain precision and the in-store execution to go with it, it's very hard to deliver the performance. So I would say that our market share performance has been a composite performance of everybody in Tesco across all the functions and departments doing their job really well and executing against the plan. So I think that would be the answer to the first question.

The second question around price investment is that clearly, Christmas is the FA Cup final for retailers. So we all lean in very heavily to a very strong trade plan over Christmas. And it's also a chance for customers to reappraise your proposition, shop [ B2B ] for the first time and really like and appreciate what they see. So we work very hard from everything from product innovation through to hiring of nearly 30,000 extra people through to the very strong trade plan that we delivered. And that is quite a specific event.

It doesn't necessarily mean anything for the rest of the year per se other than the fact that we will continue to invest appropriately. And I think as you saw from our announcement earlier this week, we acted against a specific customer insight for January, February, which said we needed to provide more reliable Everyday Low Pricing on a wider range of products. And so we've traveled our Everyday Low Pricing range to 3,000. And so what you can expect from us is that we will adapt constantly to insights from customers and react, so that we're giving them the best value and that's appropriate for the moment.

Another angle, Monique, as well to keep in mind is the perspective on channels. So when you look at where the market share gain came from over the Christmas period, we got it in large stores, which is great, because that's the key estate. But at the same time, that 11% growth we saw in online also led us to continue to gain market share in our online business, which was also great to see. And given the fact that we are over 36% market share in online, that gave us an extra benefit on market share as well.

We'll now take our next question from Matt Clements from Barclays.

First question was, you often give a very useful insight into the health of the U.K. consumer at your update. I was wondering if you could just talk us through how sentiment and spending evolved through the period, particularly around maybe November with the budget? And how do you think we're set up on consumer health into '26, government policy, et cetera?

And then the second question was around Finest, which is compounding exceptional growth now. Any views on Finest into next year? I mean, particularly around the dining-out to dining-in trend? Do you expect that to continue? What's the innovation pipeline like? Anything on that would be helpful.

Great. Thanks, Matt. So I think the first thing to say on consumer sentiment is that we've definitely seen that consumer sentiment is mixed. I think we have a section of the community that is in pretty good shape from a household budget perspective. And then we have a section of the community that is really struggling to make ends meet. And I think that is playing out overall in terms of how customers are shopping. They're very value conscious.

At the same time, though, there is a significant proportion of households that are in decent shape financially, and they are looking for good value for money. And that, I think, is a big factor in what's driving our Finest sales. I think there is that trend towards eating in more and eating well, and that's driving our fresh food sales. And I think the consumer has shown great resilience in a lot of uncertainty. I think the budget is just one factor in a number of factors that's driving uncertainty. But we have seen a pretty resilient consumer in terms of their spending pattern and habits. And we continue to monitor it very closely. But we, to a certain extent, as long as employment remains strong, expect that resilience to continue.

And Finest really is a subset of that. I think Finest, for us, is delivering on 2 fronts. It's responding to that trend of wanting to eat restaurant quality food in your home, but it's also responding to the fact that historically, Tesco would have undertraded in that particular meal occasion or mission. And I think what you've seen for us in terms of the amount of product innovation, the bravery to go deeper into distribution, to go into more and more different categories and cuisines has given us the confidence to really fight for fair share in that meal occasion. And so we still believe there's a lot of room for growth in Finest in the coming years.

We'll now take our next question from William Woods from Bernstein.

Happy New Year. When you look at your success over the last 5 years, you've had great success with things like Aldi Price Match, Clubcard Prices, Finest, et cetera, and your peers have played catch-up. What do you think are the next levers that you can pull over the next 5 years to continue to innovate, continue to lead the market and gain market share?

Thanks very much, Will. I think first and foremost, we would say that our strategy of focusing on the core basics and executing them brilliantly and consistently remains a fundamental pillar and foundation stone of our strategy going forward. The second thing I would say is that the building out of our proximity to customers in terms of their food needs is equally important. So what we've done in terms of extending our grocery home shopping, slot availability, the work we've done to build Whoosh into a really market-leading from a value point of view quick commerce model. The launch of F&F online are all contributing factors to getting closer to customers and making life more convenient.

And then on top of that, we're working very hard to get really close from a data point of view to our customer base. And that is really starting to deliver results for us. And that, I think, is where the greatest opportunity lies is using data and insight to really get closer and closer to customers and anticipate and serve their needs, both digitally and physically. And we see clearly Clubcard at the very heart of that. And we also see dunnhumby as a clear source of competitive advantage to help us deliver that as well.

And probably I should finish by saying something that's not necessarily the sexiest thing, but is absolutely critical, which is that we have an incredibly strong Save to Invest program. Imran has led this since he's joined the business. The step-up in our savings has been extraordinary from GBP 300 million a year to nearly over GBP 0.5 billion a year. And that shouldn't be underestimated in what it has allowed us to do in terms of stepping up capital investment, stepping up our investment in value without ever compromising on the customer journey. So they'd be the key pillars of what underpin our future growth opportunity.

Our next question comes from Ben Zoega from Deutsche Bank.

Just a couple of questions, follow-ups from my side. Firstly, on inflation, and secondly, on supply funding. So firstly, you say you've improved your price position against the market. I just wanted to ask, is this broad-based across competitors, or were there particular competitors that you'd call out as closing that gap against? And are there any particular product areas where you focused your price investments such as fresh foods?

Secondly, on supplier funding, is it fair to say that the elevated levels of supplier funding in H1 has continued into Q3 and Christmas, particularly as the market turned more promotional? And are you able to comment on the levels of brand support behind the expansion of Everyday Low Prices?

Look, I mean, in terms of inflation and strengthening price position, I mean, we take a view, and we obviously have our own pricing strategy, and we have stuck to that since over the last 5 years. And look, we take a broad view that we want to continue to strengthen versus everyone. I mean, ultimately, the ultimate judge of how strong your price really is, is the customer. And the combination of Aldi Price Match, Clubcard Prices and now Low Everyday Prices, in our view, is the right combination, and it's made us stronger and stronger, and it's working well for us. And I would say to you, it's a broad-based strengthening across most of our competitors, which is good to see.

Then in terms of promo intensity and supplier funding, look, the truth is, promo funding has gone up a bit. You saw that from the brands wanting to regain volume growth, which is good for us, because it comes under the banner of Tesco and Clubcard Prices. So we like to see that. That's a good thing. You will have noticed that the Low Everyday Prices is -- or Everyday Low Prices is brand oriented, which is good. Brands like to grow, and they can see that they have grown with Tesco online and in-store, and they want to continue to grow, and we have a great partnership with them. As ever, any campaign or events we run, there are always some investments from our side, some investments from the brand side, but you wouldn't expect me to give you some commercial details on the call here in terms of how we execute these. But suffice it to say, they are customer-centric and data-led. And clearly, the idea behind them is to continue to grow and gain share.

And we'll now take our last question today from Karine Elias from Barclays.

Most of them have been answered, but just one final one. In the release, you mentioned, obviously, the competitive environment being as competitive as ever. Just broadly speaking, I think historically, you've called it more rational. Do you feel that that's still the case? Or perhaps there was some intensity going into Christmas?

So the definition of rational is always a broad one when you're dealing with 10 to 12 different competitors who are all looking to win the basket from you. But I would say that the market intensity in terms of competition, pricing, et cetera, has remained strong since February last year. It didn't really change over Christmas. But I think what, and hopefully, you will have observed is that our response has been really decisive and really quick, and we have maintained that intensity throughout the year. And that's what really helped us underpin the very strong market share performance that you saw over Christmas.

Thank you. That was the last question today. With this, I'd like to hand the call back over to Ken Murphy for closing remarks. Over to you, sir.

Thank you so much, everyone, who's joined the call, took the time out. I know it's an incredibly busy day with a lot of announcements from various different companies. So we really appreciate you taking the time to join us. Thank you all for the excellent questions. I wish everybody a really happy New Year and a prosperous 2026, and I'm looking forward to seeing you all in April. Thank you. Goodbye.