What happened? Tesco have just wrapped up a confident 1Q26 sales call. While mgmt. see UK grocery competition as elevated, they have not seen any erosion in their price position and continue to inflate below the market, suggesting UK volume growth of +2-3% in the quarter, well ahead of the market (c.+0.5%). Comments that profit drop through on sales growth should not be materially different to history may support some consensus upgrades despite unchanged guidance. Overall, a very sensible message, with the numbers doing the talking. There is a not unreasonable argument that the business is trading better than most expected at the beginning of the year, in spite of the incremental pressure from Asda price cuts announced in March (which started in Jan). Outside of falling UK payroll data, not a lot to pick holes in. Details: On pricing, inflation and competition: mgmt. say they are really pleased with pricing and haven''t seen price indices move materially despite a step up in competitive intensity. Market inflation for the Q was c.3.5%, with Tesco below that. While competition is intense, the market is rational and cost inflation is being passed through. On the UK consumer: see stability in the UK consumer. Despite cautious pessimism in April, 1Q has been really good. TSCO did reference UK employment levels as the key stat to watch, which we see as falling across 2025 to date, accelerating in May (see chart below). On profit drop through: feeling really confident on save to invest programme, nothing to make profit drop through very different to previous years. On marketplace/clothing: mgmt. sounded pretty excited about using Tesco Marketplace to launch the full FandF clothing range online, seeing online as key to most apparel shopping missions these days and allowing customers to easily access the full range. On suppliers: Tesco referenced a step up in branded supplier funding in the period, which they are passing straight to consumers, which helps to...