Jefferies cautious on UK retailers for 2026, downgrades Tesco, Next and AB Foods

Associated British Foods

15/12/2025 09:08

** Jefferies downgrades British retailers Tesco TSCO.L and Next NXT.L to "hold" from "buy", citing peak valuations, tough comparable sales, and an unhelpful macro backdrop

** Tesco shares down ~1%, while Next is marginally lower

** Jefferies says for the first time since early 2023, like-for-like sales at major UK retailers are growing faster than consumers' disposable income
** "There is a disconnect between market optimism and consumer confidence" - Jefferies

** Brokerage also downgrades Associated British Foods ABF.L to "underperform" from "neutral" and trims PT to 1,800p from 2,000p; ABF shares fall 1.5%

** "We see more pressing concerns at ABF, with Primark's challenges likely to continue" - Jefferies

** Last month, co said it's exploring spin-off of Primark fashion chain from its food businesses

** YTD, Tesco up 18.5%, Next rose ~40%, while ABF up ~0.5%

 (Reporting by Joel Jose in Bengaluru)

 ((mailto: joeljose@thomsonreuters.com))