Tesco boosts profit outlook after ‘strong’ Christmas; UK house prices drop in December – business live

Key events

Show key events only

Please turn on JavaScript to use this feature

Primark owner ABF's shares slide after profit warning

Ouch! Shares in Associated British Foods have dropped by over 10% after it startled the City with a profit warning.

ABF told shareholders this morning that sales growth at its Primark chain were below expections in the last 16 weeks, and had struggled in Europe and in the US.

In another blow, ABF’s food and ingredients business had “experienced mixed trading”, with sales falling more than expected in the US.

The company now expects its adjusted operating profit and adjusted earnings-per-share to be lower than last year.

In the UK, Primark’s like-for-like sales grew by 1.7% in “a difficult clothing market, particularly over Christmas”, the company says, pointing to initiatives such as “enhancing our product offer, improving price perception and increasing digital customer engagement”.

But in continental Europe, where such initiatives to the UK only recently began, like-for-like sales declined around 5.7% in the period.

George Weston, chief executive of Associated British Foods, says:

“Primark has had a challenging start to the financial year, with a mixed performance. In the UK, focused actions and investments to strengthen our customer proposition have driven improved trading and market share gains, while trading has remained weak in continental Europe.

In a challenging consumer environment, our focus is on factors within our control, including initiatives now underway in Europe aimed at improving performance. We are also making good progress to deliver Primark’s medium and longer-term growth opportunities.

Our food businesses experienced mixed trading in the period, particularly in the US where consumer demand in certain categories has continued to weaken. While we expect the tough trading conditions to continue in the short term, we remain confident in the overall prospects for the Group.”

Tesco shares fall 5% after Christmas update

Tesco are among the top fallers on the UK’s FTSE 100 share index at the start of trading in London.

They’ve dropped by 5%, with rival Sainsbury’s (whose results are due tomorrow) down 2.9%.

Kathleen Brooks, research director at XTB, says Tesco’s resulst are not a ‘roaring success’, despite the pick-up in sales at Christmas.

In the UK, the focus on Thursday is on domestic matters, specifically who were the retail winners from the crucial Christmas trading period. Tesco reported earnings that missed estimates, 3Q Like for like sales were 3.1%, versus estimates of a 4.8% gain. However, sales picked up over the Christmas period, rising 3.3%. This contributed to their highest UK market share in over a decade and allowed the company to confirm its earnings guidance for this financial year at the high end of estimates. Thus, earrings were saved by Christmas for the grocer and they could be up to £3.1bn. Online sales were also strong and rose more than 11%.

Overall, its earnings have not been a roaring success, although the pickup in Christmas trade is encouraging, and managing to retain the high end earnings guidance for this year could also boost sentiment towards the UK’s largest supermarket chain. Its stock price has been static for the past month, as investors wait for a driver. This earnings report may not set the world alight, but it could boost the share price later as it suggests that Tesco can maintain market share and profits in a challenging operating environment and where the UK consumer is constrained.

Across the UK, prices rose fastest in Northern Ireland, but they fell over the last year in London.

Halifax’s new house price data shows:

• Northern Ireland continues as the strongest performing nation or region in the UK, with average property prices rising +7.5% over the past year, with a typical home now costing £221,062.

• In Scotland, the average home now costs £217,775, with the nation recording annual price growth of +3.9% in December. Property values in Wales rose +1.6% over the year, to an average of £230,233.

• In England, the North East had the highest annual growth rate, as property prices rose by +3.5%, to £181,798. This was followed by the North West, which saw growth of +2.8%, to £245,323.

• Property prices in London fell by -1.3% over the course of 2025 to £539,086.

Halifax: UK house prices dropped unexpectedly in December

British house prices unexpectedly fell in December, lender Halifax has reported.

According to Halifax’s data, the average price of a UK property dropped by 0.6% last month, and were just 0.3% higher than a year earlier.

That’s the weakest annual growth since March 2024, with the average property price now £297,755, the lowest since June, according to Halifax.

Amanda Bryden, head of mortgages at Halifax, says:

“While this may feel like a subdued close to the housing market in 2025, overall activity levels were resilient over the last year and broadly in line with the pre-pandemic average.

Bryden also suggests that various forces could lift the market this year, saying:

While December’s monthly fall in prices was likely related to uncertainty in the latter part of the year, this should now be starting to unwind.

Further, mortgage rates are already reducing following the latest Base Rate cut and there are an increasing number of lending options available for those borrowing at a higher loan-to-value.

Property agent Emma Fildes of Brickweaver explains that home owners looking to sell their homes over Christmas accepted “realistic prices” from motivated buyers.

Greggs: A challenging year due to subdued consumer confidence

A branch of Greggs in London, Britain, on December 30, 2025. Photograph: Maja Smiejkowska/Reuters

Baking chain Greggs has told shareholders that market conditions remain “challenging”.

Greggs insists, though, that it is continuing to outperform the market, by growing its market share compared with a year ago.

It has reported that like-for-like sales at its company-managed shops rose by 2.9% in the fourth quarter of last year.

Greggs says that “subdued consumer confidence continued to impact the food-to-go market, as did weather extremes earlier in the year” (when it was either too cold or too hot).

Roisin Currie, Gregg’s CEO, says:

“We made good progress in 2025, in a challenging year where subdued consumer confidence impacted the food-to-go market. Against this backdrop, I’m pleased that Greggs outperformed the wider market and increased its market share of visits.

“We enter 2026 with a strong pipeline of new opportunities to make Greggs even more convenient for customers. This is underpinned by the investments we have been making in our supply chain capacity, which start to become operational this year. Our ongoing focus on efficiency allows us to deliver exceptional value to customers who are managing their budgets carefully.”

Interestingly, M&S blames ‘reduced’ shopper numbers on the high street for the drop in sales at its fashion, home and beauty division, as well as the knock-on impact of last year’s cyber attack.

It tells shareholders:

Fashion, Home & Beauty sales decreased 2.5%, with like-for-like sales down 2.9% as online sales growth was offset by store sales decline.

Performance reflected reduced high street footfall, and the long tail impact on stock data and management following the incident earlier in the year. Stock into Sale during December was higher than last year but sell-through rates have been strong.

M&S reports record customers over Christmas

Marks & Spencer has reported a jump in food sales over the Christmas period, but its clothing, homewear and beauty division continued to be hurt by the cyber-attack last year.

M&S’s food sales rose by 6.6% in the 13 weeks to 27 December, but taking at its fashion, home & beauty operations fell 2.5% in the period.

Stuart Machin, M&S chief executive says:

“A record number of customers shopped M&S this Christmas. From the festive food shop, to picking up party outfits and gifts, millions more trusted M&S to deliver the family Christmas.

Food sales were strong and the business continues to outperform, hitting a new market share milestone in the period. We are the UK’s fastest growing grocer for families, reflecting our investment in value and core family staples, and demonstrating progress in our journey to become a shopping list retailer.

Fashion, Home & Beauty is getting back on track as we work through the tail end of recovery. Sales overall were slightly down but online performance continued to improve as digital sales recovered. We planned a bigger Sale this year, with strong sell-through already making way for our new season lines.

Tesco lifts profit forecast after 'strong Christmas'

Here we go! Tesco’s Christmas results have just landed in the City, and it has slightly lifted its profit forecast for this year.

Chief executive Ken Murphy declares he is “delighted with the strong Christmas we delivered for our customers”.

Tesco has reported that UK sales rose by 3.2% in the six weeks to 3 January, and by 3.9% in the previous 13 weeks (its third quarter).

Sales of its Finest food range rose by 13.0%, with “particularly strong growth” of 22% in Tesco’s party food range.

Like-for-like Home & Clothing sales rose 2.1%, including clothing growth of +4.4% for the Christmas period.

And in a boost to shareholders, Tesco is now predicting that “following a strong Christmas performance” it expects to post adjusted operating profits at the upper end of the £2.9bn to £3.1bn guidance range issued in October.

Murphy says:

Our investments in value, quality and service drove further gains in customer satisfaction and strong growth in fresh food, contributing to our highest UK market share in over a decade.

UK retail football in 'biggest annual uplift' since 2011 in December

Retail tech firm MRI Software has reported that UK retail ended 2025 on a far stronger note than expected.

MRI’s data shows that footfall at retail sites in December rose by 1.3% year on year, the biggest annual uplift for the month since 2011.

MRI explain:

The festive boost was driven by a sharp rise in evening and night-time visits, up +5.3% after 5pm, as shoppers increasingly combined retail with dining, leisure, and socialising. High streets led annual growth (+2.0%), followed by retail parks (+1.2%) and shopping centres (+0.1%), reinforcing the role of experience-led trips in driving footfall.

Boxing Day was the standout trading day, recording its strongest performance in a decade. Footfall rose +4.4% year on year across all retail destinations, with evening visits up almost +10%, underlining how post-Christmas trading is shifting away from purely transactional shopping towards social and experiential activity.

Introduction: Was it a good Christmas for UK retailers?

Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.

The Christmas leftovers are over, and any ill-fitting clothes or inappropriate gifts could have been returned, but we’re still learning which retailers won, or lost, over the festive season.

This morning, retail heavyweights Tesco and Marks & Spencer are about to release trading results covering the Christmas period, along with baking chain Greggs.

These results may show whether cautious consumers cut back over Christmas, or pushed the boat out, and whether the budget in late November had any impact on spending.

Data earlier this week showed that spending on promotions and deals reached its highest level since before the pandemic in December, which will have squeezed profit margins….

There could also be details on the impact of avian flu on the UK turkey flock, which forced some supermarkets to import birds from elsewhere in Europe. Last month, Marks & Spencer said all its turkey was sourced from Britain or Ireland, while the Co-op, Sainsbury’s and Tesco said their turkey was entirely British-sourced.

City analysts will also be scrutining Greggs’ results, due to concerns that the chain may be over-expanding as its sales growth slows….

The agenda

• 7am GMT: Tesco, Greggs, and M&S release financial results

• 7am GMT: Halifax house price index for December

• 10am GMT: Eurozone unemployment data for November

• 12.30pm GMT: Challenger US jobs cut report

• 1.30pm GMT: US weekly jobless claims

• 1.30pm GMT: US trade data for October