What happened? Tesco released their Q3-25 and Christmas trading update with UK LFL in Q3 of 3.8%, which was 20bp ahead/below of consensus +3.6%. For the Christmas period (6 weeks to 4th Jan), UK LFL is 4.1%, in line with of consensus +4.1%. Booker LFL over the 19-week period came in at -1.3% vs cons: -0.9%, but over Xmas +1.4% vs cons -0.7%. Tesco reiterated previous FY25 guidance: Retail profit of around GBP2.9bn (vs BNPPe: GBP2.98bn, VA cons: GBP2.96bn) and Retail FCF - GBP1.4-1.8bn (vs BNPPe: GBP1.8bn) BNPP Exane View: Post Kantar data on Tuesday 7th, we think the market was expecting Xmas to come in below consensus in the UK, so would consider the headline LFL a beat. Booker''s acceleration over Xmas is also a relief. However, the unchanged guidance on profits and cash flow will temper expectations of this translating to upgrades and does point to a meaningfully lower profit drop through in 2H vs 1H. With this investment translating into share gains, we think it points to intentional actions by Tesco, rather than any change in market costs, leaving the investment case unchanged. Likely direction of consensus: We do not expect consensus to make changes to profit expectations post this print. Anticipated market reaction: We expect a broadly neutral reaction. The stock may trade off at the open, but likely recovers post call. Conference call: Tesco will host a conference call at 9am UK time. Valuation: Tesco trades on FY26e PE of 12.3x (5 year average 13.5x) and FY26e FCF yield of 7.9% (5y avg. 8.4%) Highlights from the release UK: Food sales +4.7% - primarily driven by volume growth. Suggests Tesco inflation well below Kantar industry number of c3% over last 12 weeks. Tesco reconfirm their position as cheapest full line grocery. Finest sales +15.5%. Online sales +10.9% (+11.5% last year, +9% 1H) Booker: 19 week catering LFL +2.8% (last year +3.5%, +10.1% ex Best Food Logistics; core catering +1.7% in 1H, BFL -6.6%) 19 week retail +1.3% (+4.1%, +9.4%...