Citi has taken a selective stance on Europe's retail and brands sector for 2026, arguing that a sluggish economic backdrop means investors should favour companies with clear structural advantages. Its top picks are Inditex (buy) and Tesco PLC (LSE:TSCO) (buy), while Associated British Foods PLC (LSE:ABF) is rated 'sell'.
Tesco PLC (LSE:TSCO) and J Sainsbury PLC (LSE:SBRY) are currently enjoying a "supportive environment" from a pace of new discounter store development well below historical averages, according to a new research note from UBS. Using geospatial data from the UBS 'Evidence Lab' unit, UBS retail analysts observed that industry-wide space growth is running at around 1.0%, significantly below the pre-Covid average of 2.6%.
Tesco PLC (LSE:TSCO) shares fell after grocery market data showed its rate of sales growth slowing in recent weeks, while J Sainsbury PLC (LSE:SBRY) popped higher as growth held steady, though wider spending was curtailed due to pre-Budget jitters. Grocery price inflation held steady at 4.7% last month, according to the Worldpanel supermarket till report from Numerator, formerly Kantar, with supermarket sales rose 3.4% over the four-week period, below the rate of inflation.
Investor positioning in the European retail sector has shifted subtly but meaningfully over the past month, according to a new UBS analysis, with Tesco PLC (LSE:TSCO) and Next PLC (LSE:NXT) particular favourites. The bank's crowding framework – which emphasises changes in positioning over one- and three-month periods – shows investors leaning more toward buying rather than betting against the stocks, with food retailers seeing the most pronounced improvement in support.
Tesco remains a reasonably cheap supermarket pick, benefiting from improved guidance and market share gains despite competitive pressures. TSCDF's profit growth has slowed due to price reductions and discount supermarket competition, but sales are up, driven by increased volumes and value-focused strategies. Cost savings and strong fresh grocery performance help offset inflation and downtrading, with Tesco's pricing and product range resonating with customers.
The latest Asda Income Tracker offers a reminder that headline figures on household finances can hide a world of difference. Average discretionary income crept up by about 1% in October, the fastest monthly improvement this year, yet that modest progress disguises a sharp divide between higher and lower earners.
Here is how Tesco PLC (TSCDY) and Ermenegildo Zegna N.V. (ZGN) have performed compared to their sector so far this year.
Despite popping on the day of the release of its interim results, the Tesco share price (LON:TSCO) looks to have peaked. With the shares struggling to breach their 450p price ceiling, I reiterate my previous call that further upside for the stock is limited at this juncture.
Tesco (TSCDY) might move higher on growing optimism about its earnings prospects, which is reflected by its upgrade to a Zacks Rank #1 (Strong Buy).
W, TSCDY, MLKN, GO and ABBNY have been added to the Zacks Rank #1 (Strong Buy) List on October 17, 2025.
Investors with an interest in Retail - Supermarkets stocks have likely encountered both Tesco PLC (TSCDY) and Walmart (WMT). But which of these two companies is the best option for those looking for undervalued stocks?
Tesco PLC (OTCPK:TSCDY) Q2 2026 Earnings Call October 2, 2025 4:00 AM EDT Company Participants Ken Murphy - Group CEO & Executive Director Imran Nawaz - CFO & Director Conference Call Participants Frederick Wild - Jefferies LLC, Research Division Monique Pollard - Citigroup Inc., Research Division Clive Black - Shore Capital Group Ltd., Research Division Robert Joyce - BNP Paribas Exane, Research Division James Anstead - Barclays Bank PLC, Research Division Manjari Dhar - RBC Capital Markets, Research Division Sreedhar Mahamkali - UBS Investment Bank, Research Division Benjamin Yokyong-Zoega - Deutsche Bank AG, Research Division François Digard - Kepler Cheuvreux, Research Division Presentation Ken Murphy Group CEO & Executive Director Good morning, everyone, and welcome.