Sainsbury’s improves profit outlook as grocery sales grow

Supermarket giant Sainsbury’s has improved its profit outlook as it revealed stronger grocery sales over the past half-year.

The retailer said it saw shoppers buying greater volumes of products, as price inflation slowed down over the period.

But boss Simon Roberts stressed that “many households are finding things tough at the moment” amid pressure on consumer budgets.

The London-based company said it has benefited through pricing measures, such as its loyalty Nectar Prices and its Aldi Price Match comparison scheme, to help bring in more customers.

Sainsbury’s told shareholders that total revenues increased by 4.1% to £16.2 billion for the 28 weeks to September 12, compared with a year earlier.

Sales from continuing operations, excluding fuel, were up 2.6%, on the back of a 2.9% rise in grocery sales to £13.2 billion for the period.

Meanwhile, Sainsbury’s saw general merchandise sales, which includes its Tu brand, slip 3.4% due to reduced sales space in stores and a “subdued clothing market”.

However, fuel sales shot 17.8% higher over the half-year due to the sharp jump in prices since the Iran war pushed up global oil prices.

The company reported underlying operating profit of £525 million, up 3.6%, for the half-year.

It said it is now on track to deliver an underlying operating profit of between £1.025 billion and £1.065 billion for the year.

It had previously guided towards a range of between £975 million and £1.075 billion, but said this would now be the equivalent to between £965 million and £1.065 billion due to its proposed sale of Argos.

In July, Sainsbury’s agreed to sell Argos for at least £120 million to Swift Partners – a new company set up by retail experts including former Co-operative Group boss Richard Pennycook – around 10 years after buying the brand for £1.4 billion.

Mr Roberts said: “As we progress the sale of Argos and further sharpen our focus on food, we are building a simpler, more focused Sainsbury’s.

“With great value, outstanding quality and exciting new food across our ranges, we’re looking forward to helping customers enjoy a really special Christmas.”