Sainsbury's has raised its profit forecast for the full year after reporting stronger grocery sales in the first half, driven by shoppers buying larger volumes as price inflation eased.
The supermarket chain said total revenues increased by 4.1% to £16.2 billion for the 28 weeks to September 12, compared with the same period a year earlier. Sales from continuing operations, excluding fuel, were up 2.6%, helped by a 2.9% rise in grocery sales to £13.2 billion.
Pricing measures attract customers
Chief executive Simon Roberts said the company has benefited from pricing initiatives, including its Nectar Prices loyalty scheme and its Aldi Price Match comparison programme, which have helped bring in more customers.
However, Roberts acknowledged the ongoing strain on consumers, stating that “many households are finding things tough at the moment” amid pressure on budgets.
Mixed performance across categories
General merchandise sales, which include the Tu clothing brand, fell 3.4% due to reduced sales space in stores and a “subdued clothing market”. In contrast, fuel sales jumped 17.8% over the half-year, reflecting the sharp rise in prices following the Iran war's impact on global oil markets.
The company reported underlying operating profit of £525 million, up 3.6% for the period.
Revised full-year guidance
Sainsbury's now expects to deliver an underlying operating profit of between £1.025 billion and £1.065 billion for the full year, up from its previous guidance of £975 million to £1.075 billion. However, it noted that this would equate to between £965 million and £1.065 billion once the proposed sale of Argos is completed.
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, roughly a decade after buying the brand for £1.4 billion.
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.”
