Sainsbury's chief executive Simon Roberts has warned that inflationary pressure continues to build in the supply chain, with uncertainty lingering over how the Middle East conflict will affect shoppers. The supermarket giant reported 'encouraging' trading in recent months but noted some caution among consumers.
Inflation Outlook and Impact
Roberts stated that inflation is 'coming through' but stressed it is likely to be below some recent forecasts. 'It's encouraging to see some of the industry trade bodies reducing some of their forecasts but there is still uncertainty over how inflation will grow,' he said. 'There is pressure on inflation in the system. We've previously said that it would take until into the summer to see the level at which inflation would come through. It's not coming through as significantly as some had expected but it is still coming through.'
Sainsbury's reported that its grocery inflation in the most recent quarter was lower than in the previous period. The Office for National Statistics recorded food and non-alcoholic drink inflation at 2.2% in May, its lowest level since 2024.
Sales Performance
The UK's second-largest supermarket chain saw total retail sales, excluding fuel, rise 2.7% to £9.15 billion in the 16 weeks to June 20, compared with the same period last year. Sales of the Sainsbury's brand grew 3.1% to £8.04 billion, with grocery sales up 3.6% year-on-year.
Growth was driven by investment in value, including its Aldi price match and Nectar price discounts. However, grocery growth was partially offset by a 3.7% decline in general merchandise and clothing sales. The Tu clothing arm fell 2.1% against tough comparisons, while general merchandise—including homeware and technology—dropped 6.3%. Argos sales dipped 0.5%, as positive volume growth was 'offset by the impact of subdued consumer spending on average selling price.'
CEO Comments and Market Reaction
Roberts said: 'Customers are looking for value now more than ever. We are consistently delivering outstanding quality at great value, so more people are choosing Sainsbury's for their big weekly shop. This has driven an encouraging start to the year with continued volume growth and market outperformance. With the World Cup in full swing and an exciting summer of sport ahead, I want to say a huge thank you to all our Sainsbury's and Argos colleagues and our farmers and suppliers for showing up so well for our customers every day.'
Sainsbury's shares rose 1.9% in early trading following the announcement.
