Sainsbury’s has issued a stark warning that the ongoing conflict in the Middle East is expected to affect both its customers and its business, potentially leading to a decline in profits. The supermarket chain’s caution mirrors a similar message from its rival Tesco, highlighting the widespread impact of geopolitical tensions on the retail sector.
Profit Forecast and Uncertainty
The company anticipates that its underlying operating profits for the current financial year will fall within a range of £975 million to £1.075 billion. However, Sainsbury’s emphasised that the duration and full extent of the conflict’s impact remain highly uncertain, making precise forecasting difficult.
Previous Financial Performance
For the financial year ending 28 February, Sainsbury’s reported an underlying operating profit of £1.025 billion, representing a 1.1 per cent decline compared to the previous year. Despite this dip, pre-tax profits for the same period surged by 55.3 per cent to reach £393 million. Group revenues, excluding VAT, increased by 2.7 per cent to £33.6 billion.
Retail Sales Performance
Retail sales, excluding fuel, rose by 4.3 per cent, driven by a robust 5.2 per cent increase in grocery sales. Meanwhile, its Argos business recorded sales growth of 0.7 per cent, totalling £4.1 billion. These figures underscore the mixed performance across different segments of the business amid external pressures.
The warning from Sainsbury’s comes as consumers and businesses alike brace for potential cost-of-living increases linked to the Iran conflict, with Prime Minister Keir Starmer previously cautioning that the economic repercussions would be challenging for Britons.
