What happened? Tesco reported 4Q24/FY25 results. FY25 Sales +3% to GBP69.9bn (vs BBerg cons. GBP70.0bn, BNPPe GBP69.7bn). 4Q25 UK Grocery LFL of +4.3% was vs cons +4.2%. Retail EBIT was GBP2,973bn, 8% YoY (vs cons.GBP2.96bn, BNPP GBP2.93bn). Group EBIT +11% of GBP3.13bnm vs cons GBP3.07bn. Underlying EPS of 27.4p, was +17% and +3% above vs cons 26.6p/ Retail FCF (FY25) was GBP1.75bn (vs GBP2.1bn FY24; BNPPe GBP1.71bn). Below the line cash exceptionals were GBP55mn vs GBP98mn in FY24. Net debt was GBP9.5bn (from GBP9.7bn). FY25 dividend of 13.7p/share was +13% YoY. Guidance: Operating profit: Tesco guided to a group adjusted operating profit range (now inc. cGBP100mn from financial services) of GBP2.7bn to GBP3.0bn. At the midpoint, this is down -9% YoY and -9%/-5% below Bberg cons/BNPPe of (GBP3.14bn/GBP2.99bn) This very close to the guide we forecast in our note last week, which we believe is close to buyside expectations. Tesco state that the market has got more competitive and this guidance gives them the ''flexibility and firepower to be able to respond to current market conditions''. Retail FCF: Tesco have re-affirmed their medium term range of GBP1.4 to GBP1.8bn (BNPPe GBP1.6bn ex financial services). Buybacks: in line with market/our expectations Tesco will buyback GBP750mn stock as part of their ongoing capital returns programme, with a further GBP700mn funded by the bank sale. Total equivalent to c.6.3% market cap. Other: Tesco guide to FY26 capex of GBP1.45bn (FY25: GBP1.45bn) and tax rate 27% (FY25: 26.7%). BNPP Exane View: While the FY26 guide is 9% below consensus, multiple conversations post our note last week suggest the buyside was broadly around the number Tesco is now guiding to. While the guide does not cite Asda, the number and commentary leaves little doubt that Tesco has both the willingness and capacity to respond to any competitive escalation. Its commitment to the buyback illustrates its balance sheet strength, with material capacity to even the low end of its targeted range....