Sainsbury's chief executive Simon Roberts has issued a stark warning that the ongoing conflict in Iran will significantly impact both customers and the business, mirroring concerns recently voiced by rival supermarket giant Tesco. The company stated that the exact effects remain "very uncertain" and has consequently adjusted its profit guidance to reflect this volatile situation.
Financial Adjustments Amid Geopolitical Tensions
In its latest financial results, Sainsbury's revealed it expects to deliver underlying operating profits of between £975 million and £1.075 billion for the current financial year. This adjustment comes as the retailer reported a £1.025 billion underlying operating profit for the year ending February 28, marking a 1.1% decrease from the previous year. Meanwhile, pre-tax profits saw a substantial jump of 55.3% to £393 million for the same period.
Customer Focus on Cost of Living Intensifies
Simon Roberts emphasised that since the conflict began on February 28, shoppers have become "even more focused on the cost of living." He pledged that Sainsbury's is "absolutely committed" to ensuring customers receive "the best possible value" when shopping. Roberts noted, "More and more customers are choosing Sainsbury's for more of their shopping, trusting us to deliver great value day in, day out."
He added, "We will do everything we can to support our customers and colleagues over the coming months, with absolute focus on keeping prices low. We have made a positive start to the new financial year, with continued strong Grocery momentum."
Revenue Growth and Sales Performance
The retailer also disclosed that group revenues, excluding VAT, increased by 2.7% to £33.6 billion for the year. Retail sales, excluding fuel, rose by 4.3%, driven by a 5.2% surge in grocery sales attributed to robust volume growth. Additionally, sales in its Argos business grew by 0.7% to £4.1 billion for the year.
Tesco's Parallel Warnings and Preparedness
This development follows Tesco's announcement last week that profits could decline over the current year due to increased uncertainty stemming from the Middle East conflict. Tesco's chief executive Ken Murphy stated the supermarket will do "whatever we can" to maintain low food prices for shoppers.
Murphy reported that Tesco has not yet observed any impact on product availability or prices, excluding fuel, since the conflict erupted at the end of February. However, the company has engaged with the Government to prepare for a worst-case scenario, which might involve shortages of carbon dioxide critical to the food industry.
Ken Murphy told reporters, "We haven't seen any issues and are in very strong shape. We constantly talk to our suppliers and none of our suppliers have raised any issues."
Both supermarket chains are now navigating heightened geopolitical risks, with Sainsbury's explicitly warning of potential disruptions to customers and business operations, underscoring the broader economic implications of the Iran conflict on the UK retail sector.
