BNPP View: Tesco''s FY26e EBIT came in 2% above cons, with retail FCF of GBP 1,957mn solidly ahead of our expectations. FY27e EBIT guidance of 3.0 to 3.3bn is c.3% below consensus at the midpoint, though mid-term FCF guidance has been increased to GBP 1.5-2bn (from 1.4-1.8bn). Importantly, post our conversation with the company we understand Tesco''s guidance at the low end captures ''potential'' impacts on the UK consumer from the Middle East conflict, not what they have seen to date. As such we do not expect much change to consensus estimates. With the midpoint of guidance below consensus we can see the stock trading off LSD% at the open. However, we can also see the stock recovering with the conference call if management clarify that solid profit growth is still the base case for FY27e. What happened? Tesco released FY26 results. FY26 sales GBP 73.7bn +5.3% (vs company compiled cons. GBP 72.5bn, BNPP GBP 72.3bn). 4Q26 UK Grocery LfL of +3.1% was broadly in line with cons +3.3% (BNPP +3.2%) and Xmas trading of +3.2%. Retail EBIT was GBP 3,152m, +0.8% YoY (+2% vs cons GBP 3,099m, BNPP GBP 3,148m). Underlying EPS of 29p, +5.9% YoY (vs cons. 28.6p, BNPP 28.6p). Retail FCF: was GBP 1,957m vs BNPP 1,866mn and 1,750m in FY25. Net debt was GBP 10.6bn (from 9.5bn in FY25). Guidance: FY26 Retail EBIT GBP 3.0-3.3bn vs cons GBP 3,244m, BNPP 3,294mn. At the midpoint, this implies flat growth YoY. Retail FCF guidance is increased at GBP 1.5 to 2.0bn. Buyback: Tesco will buyback stock of GBP 750mn in FY27 vs BNPP 750mn, equivalent to 2.5% of current market cap. Conference call: Tesco will host a conference call at 9am UK time. Likely direction of consensus: we expect minimal changes to consensus post this print. Performance YTD: Tesco stock is +7% YTD vs SXXP +4% and our coverage average of +8%. On our estimates the stock trades on 14.8x NTM PE, 6.2% FY27e FCF yield.