Next, Tesco and Greggs reported resilient Christmas 2025 trading despite rising wage and tax costs. Next led with double-digit sales growth and upgraded profits, Tesco gained grocery market share, while Greggs saw sales improve but margins remain under pressure heading into 2026.
Christmas sales are the most important test of UK consumer confidence. Trading updates from Next, Tesco and Greggs show spending held up over Christmas 2025, but rising wage costs, higher National Insurance and tax pressures mean 2026 will be tougher for retailers.
NEXT: Clear Christmas Winner With Strong Cash Returns
Next delivered one of the strongest Christmas trading updates in UK retail, outperforming expectations across sales and profits.
Key results (9 weeks to 27 December 2025):
- Full-price sales +10.6% (well ahead of guidance)
- UK sales +5.9%
- International online sales +38.3%
The group upgraded full-year pre-tax profit guidance by £15m to £1.15bn, representing 13.7% year-on-year growth. This includes the benefit of a 53rd trading week, worth around £22m, treated separately.
Looking ahead, management expects slower growth in 2026/27, with full-price sales forecast to rise around 4.5%, reflecting pressure on UK employment and consumer spending.
Next also highlighted strong cash generation. Share buybacks were paused after £131m was completed, with surplus cash instead returned via a £421m B-share scheme (around 360p per share). More than 40% of UK online sales now come from third-party brands via the Next Platform.
TESCO: Market Share Gains in a Tough Grocery Market
Tesco reported solid Christmas trading and continued market-share gains, reinforcing its leadership in UK food retail.
Key figures (19 weeks to 3 January 2026):
- UK like-for-like sales +3.7%
- Six-week Christmas period +3.2%
- Fresh food +6.6%
- Finest premium range +13%
- Online sales +11%
- Whoosh rapid delivery +47%
Tesco’s UK grocery market share rose to around 28.7%, its highest level in more than a decade. The company expects full-year adjusted operating profit at the upper end of its £2.9bn–£3.1bn guidance.
Shares dipped after the update as investors focused on a slight slowdown compared with the previous quarter. Chief executive Ken Murphy warned that higher wages, National Insurance and business-rate reforms could weigh on profits in 2026/27.
GREGGS: Sales Growth, Margins Still Under Pressure
Greggs ended 2025 with improved momentum after a challenging first half.
Performance highlights:
- Q4 total sales +7.4%
- Like-for-like sales +2.9% in company-managed shops
- Full-year sales £2.15bn (+6.8%)
- Store estate expanded to 2,739 outlets
Despite sales growth, profits remain under pressure from rising staff costs and supply-chain investment. Around 120 net new stores are planned for 2026, focused on under-penetrated locations and smaller formats.
Wider UK Retail Context
- Spending on food and essentials remains resilient
- Discretionary spending is uneven, with consumers cautious
- Rising labour and tax costs dominate retailer outlooks
- Competitive pressure is intensifying, widening the gap between strong operators and weaker rivals
These results contrast with weaker Christmas updates from several mid-tier retailers, highlighting a clear divide between market leaders and laggards.
Outlook for 2026
Christmas 2025 was encouraging for UK retail leaders, but 2026 will be defined by cost control, pricing discipline and operational execution rather than demand alone.
