Supermarket giant Sainsbury’s (LSE: SBRY) reported a 27% drop in pretax profit, amounting to £275 million in the half-year ending September 16, down from £376 million a year ago. Despite this decline, the retailer experienced a 3.5% increase in revenue, reaching £16.98 billion, driven primarily by robust grocery sales.
During this period, Sainsbury’s witnessed a surge in grocery sales, marking a 10% increase to £12.4 billion. This growth, attributed to volume expansion, led to substantial market share gains and consistent outperformance. However, the company faced challenges in its clothing segment, where sales plummeted by 8.4% to approximately £500 million due to reduced demand caused by unseasonable weather patterns.
Sainsbury’s, trading on the London Stock Exchange, saw a 4.8% increase in its share price, reaching 274.36 pence per share at the opening of the London market, reflecting investors’ confidence despite the profit decline.
Analyst Charlie Huggins of Wealth Club commended Sainsbury’s efforts to maintain its competitive edge in the market. “Sainsbury’s has worked hard to lower prices in the face of intense competition. The launch of Nectar prices, where Nectar card holders save money on everyday items, seems to have been well received and has helped the group to hold its own against Tesco and the German discounters,” he stated.
Looking ahead, Sainsbury’s anticipates reporting underlying pretax profit between £670 million and £700 million, despite challenges posed by tough comparatives and Financial Services headwinds. The company also increased its retail cash flow guidance to £600 million from £500 million.
Sainsbury’s CEO Simon Roberts expressed confidence in the upcoming holiday season, stating, “We’re ready to give customers at Sainsbury’s and Argos everything they want to have a brilliant Christmas. We’re helping everyone to treat themselves with fantastic value and more delicious new food than ever before. As we head into this key trading period, we are encouraged by our strong momentum and we remain fully focused on delivering for customers and shareholders.”
