Sainsburys has forecast up to 10% growth in retail operating profit in its new financial year as it said that it can continue to win customers from rivals.
For the year ending 2 March, Sainsburys posted underlying pre-tax profit of £701 million. This was ahead of guidance of £670-700 million and the £690 million made in 2022/23.
Shares were however down 2% in morning trading, which analysts said reflected a weaker performance from general merchandise and a forecast for lower profit from financial services, which the group is winding down.
Total sales for 2023/24 were up 3.4% at £36.3 billion, with fourth quarter like-for-like sales excluding fuel up 4.8%.
In grocery, the retailer said it benefitted from new product launches and the continuing consumer trend of eating at home more than eating out.
Market Share
Britain’s second largest supermarket group has a 15.3% share of the UK’s grocery market according to the latest data from Kantar.
The retailer, which trails behind only Tesco, beat company guidance for profit in its 2023/24 year as it outperformed the wider market.
Sainsburys and Tesco – which also forecast a rise in profit – are pulling ahead of rivals Asda and Morrisons who facing high debts.
Under chief executive Simon Roberts, Sainsbury’s matched discounter Aldi’s prices on essential items and began offering better deals for its members through its Nectar loyalty scheme.
This was financed by cutting £1.3 billion of costs over the last three years.
In February, it set a new three-year cost savings target and vowed to step up capital expenditure and boost returns for shareholders.
‘Momentum’
Earlier this week, data from Kantar revealed that Sainsburys was one of the fastest growing supermarkets in the UK, with its market share up 40 basis points year-on-year.
“We’re really encouraged by momentum we’ve got in the business,” Roberts told reporters on Thursday.
He noted evidence that UK consumers are starting to “trade up” to pricier food products but that they are still cautious on general merchandise purchases.
