Sainsbury’s ups profit guidance to over £1bn

Sales at the supermarket (excluding fuel) rose 5.2% over the 28 weeks ending September 13, with grocery sales up 5.3% and GM and clothing sales up 3.3% 

Sainsbury’s chief executive Simon Roberts said: “We planned for a strong summer and we really delivered, with leading product innovation, and outstanding fresh food availability when demand was highest throughout the hot weather.” 

Retail underlying operating profit was ahead of expectations at £504m, thanks to “strong trading and cost savings delivery”, which it said helped offset higher employment costs. Underlying profit before tax was £340m, up 10% year on year. 

In the statement to markets this morning, Sainsbury’s announced it would increase its profit guidance accordingly: “While we will continue to make balanced choices to invest and sustain the strength of our competitive position through the most important trading period of the year, we now expect retail underlying operating profit of more than £1bn. We continue to expect to deliver retail-free cash flow of more than £500m.”

“Our focused and effective investment in value, quality and service in the first half further strengthened our customer proposition relative to competitors and helped deliver a sales and profit performance ahead of our expectations.”

Cost-cutting during the period included the closure of the supermarket’s remaining in-store cafes, hot food, pizza and patisserie counters, as well as the move away from scratch baking in stores to a ‘bake-off’ model. 

Sainsbury’s also said the rollout of self-checkout analytics had helped it reduce shoplifting, the tech is live in 200 stores currently and is expected to be in over 400 by the end of the financial year. 

Roberts said: “We started this year with one clear priority – to sustain the strong competitive position we have built over the last five years. We have delivered on this in the first half, with focused and effective investment to ease cost-of-living pressures, keeping price inflation behind the wider market and delivering our winning combination of great value, trusted quality and leading service. This has driven continued grocery volume growth ahead of the market for a fifth consecutive year and a profit performance ahead of our expectations.

“We’re investing where it matters most with Aldi Price Match on everyday essentials and bringing personalised Your Nectar Prices to all supermarket customers. Customers saved an average of £14 on an £80+ big weekly shop with Nectar Prices. Value perception is improving across supermarkets, convenience stores and online.

“We’ve continued to invest in innovation too, including launching our new Taste the Difference Discovery ranges for restaurant-quality food at home. In its 25^th year, more and more customers are shopping Taste the Difference, driving the biggest premium own-label share gains in the market. 

“Our offer has never been stronger. So while we expect the market to remain highly competitive, our momentum gives us real confidence as we head into Christmas and we have strengthened our profit guidance today.”