British supermarket group Sainsbury’s stuck to its full-year forecast of up to 10% profit growth on Thursday, after a 3.7% rise in the first half.
The UK’s number-two supermarket chain reported robust grocery sales offset by weakness in general merchandise.
Sainsburys’ strategy of matching discounter Aldi’s pries on hundreds of essential items and providing better offers for members of its Nectar loyalty scheme, financed by cutting costs, is paying off for CEO Simon Roberts.
The group is also benefitting from the continuing trend of customers dining at home more, with sales of its premium Taste the Difference range up 18% in the first half.
Roberts said, “Out food business is going from strength to strength and we’re making the biggest market share gains in the industry, with continued strong volume growth.”
He added that he was expecting another ‘strong performance’ at Christmas.
Profits
Sainsbury’s has a UK grocery market share of 15.2% according to the latest data from market researcher Kantar, up 40 basis points year-on-year.
The retailer said it still expected 2024/25 retail underlying profit – its preferred profit measure – of between £1.01 billion and £1.06 billion.
This indicates growth of 5% to 10% versus 2023/24.
The group said it still expected to generate retail free cash flow of at least £500 million.
For the six months to 14 September, Sainsbury’s made retail underlying profit of £503 million, up from £485 million in the same period last year.
Second-quarter like-for-like sales, excluding fuel, rose 4.2% having been up 2.7% in the first quarter.
Grocery sales rose 5.3% and general merchandise and clothing sales in Sainsbury’s stores were up 2.2%.
However, sales at the Argos business fell 1.4%.
The group said, ‘We remain confident of delivering strong profit growth in the full year, with continued leverage from Sainsbury’s grocery volume growth and a stronger Argos H2 performance.’
Sainsburys’ share price remained flat year-on-year.
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