Sainsbury’s Shares Fall Despite Upbeat Profit Forecasts

Shares in Sainsbury’s fell nearly 4% to 346p on Thursday. This drop followed the supermarket's report of slowing sales growth amid ongoing cost-of-living pressures. The company raised its full-year profit target to between £1.025 billion and £1.065 billion. This is an increase from a previous estimate of £965 million. However, like-for-like sales growth declined from 2.3% to 1.2% in the three months to September. Grocery sales growth also slowed from 3.5% to 2.2%.

Key Details

Sainsbury’s chief executive Simon Roberts acknowledged that volume growth had been low. He expressed some optimism about the company's performance compared to last year. He noted that the company’s premium food range, Taste the Difference, saw sales increase by over 6% in the second quarter. The firm also recently sold its Argos business for £120 million. This sale contributed to a pre-tax loss of £164 million in the first half of the year. However, underlying pre-tax profit rose by 5% to £366 million.

Background

Roberts urged the government to avoid repeating past tax increases in the upcoming budget. He also called for reforms to the business rate tax system. He emphasized the need for measures to support hiring and agricultural investments. According to Sainsbury’s, total revenues for the 28 weeks to September 12 increased by 4.1% to £16.2 billion. This growth was driven by a 2.9% rise in grocery sales. Fuel sales surged 17.8% during the same period due to rising oil prices.

Related coverage: European Shares Rise on Strong Earnings, Carrefour Slumps, Netflix Reports Q3 Earnings; Shares Drop 6% After Guidance.

Based on reporting by: cityam.com, standard.co.uk