Sainsbury’s (LON: SBRY) reports its first-half results for the 2026/27 financial year on Thursday 22 October. The grocer will present the numbers with Argos treated as an asset held for sale because of its announced disposal. Completion is expected in February 2027.
The forecasts here are those of Shore Capital, whose analyst Clive Black set them out in a preview note. The note is titled “FY well underpinned”, which is Shore’s own view of its full-year numbers.
What Shore Capital expects
Shore forecasts first-half EBIT, or earnings before interest and tax, of £525m excluding Argos, about 4% higher than a year earlier. It puts the second half at £545m, including £9m from Argos, and full-year EBIT at £1,070m, which implies £1,061m from continuing operations. Its full-year pre-tax profit forecast is £750m.
| Measure | Figure |
|---|---|
| H1 FY27 EBIT (excluding Argos) | £525m |
| H2 FY27 EBIT (including £9m Argos) | £545m |
| FY27 EBIT (including £9m Argos) | £1,070m |
| FY27 EBIT, continuing operations | £1,061m |
| Company FY27 guidance, group EBIT | £975m to £1,075m |
Shore’s full-year figure sits near the top of the range Sainsbury gave at its preliminary results. Retail EBIT last year was £1,025m, and adding the guided £20m from Financial Services gives a base of £1,045m.
The company said on 31 July that it expected to receive about £120m from the Argos sale. Shore will formally remove Argos from its forecasts after the results.
What to watch
Financial Services is the first item. Before the Argos deal, Sainsbury guided a £20m contribution in FY27, rising to £40m in FY28. Shore expects revised guidance in October, and says finance chief Blathnaid Bergin faces considerable adjustments to the presentation because of links between Financial Services and Argos.
Trading in the first quarter was uneven. Grocery sales rose 3.6%, against a 5.0% comparative. General Merchandise and Tu clothing fell 3.7%, against 4.2% growth a year earlier. Argos sales slipped 0.5% with positive volumes, while fuel sales rose 17.5%.
For the second quarter, Shore describes a decent start helped by sunshine and the FIFA World Cup, followed by a quieter second half of the period. It sees no real staycation boost and some fatigue with the heat. Food inflation was lower than expected, with the ONS putting August at 1.1%, and Shore says this limits positive operational gearing, the extra profit that comes from sales growth spreading fixed costs.
Shore thinks the market is competitive but broadly rational, with Sainsbury disciplined. It believes supermarkets performed well, but does not expect Sainsbury’s online business to match Ocado Retail, up 17.5% in the NIQ data to 5 September, or Morrisons, which reported remote sales growth above 10% in the third quarter of FY26. It describes the convenience channel as mellow.
Costs, the Budget and the consumer
Shore expects food inflation to build gradually to between 3.0% and 5.0% as supply-chain hedges end and oil-related costs come through. Its note put diesel at about 200p a litre.
Sainsbury reports days before John Healey’s Budget on Wednesday 28 October. In September the Bank of England held its base rate at 3.75% and warned that higher energy prices could lift CPI inflation to about 4%. Home energy costs rose about 4% on average in October and could rise about 25% in January 2027. Shore says consumer confidence bounced in the summer and that where it goes next is worth watching.
Valuation and strategy
As of 21 September, Shore put the shares on 14.4 times FY27 forecast earnings, with EV/EBITDA of 5.9, EV/Sales of 0.39 and a dividend yield of 4.2%. Mr Black argues a re-rating is deserved and that the shares are a good non-discretionary hedge if the consumer cools. He also suggests the board may nudge dividend cover higher.
The strategy under chief executive Simon Roberts is Food First, built on the Taste the Difference premium own label, the Nectar loyalty scheme and Aldi Price Match.
Key points for Thursday
- First-half EBIT against Shore’s £525m, excluding Argos.
- Revised Financial Services guidance after the Argos sale.
- Any change to the £975m to £1,075m group EBIT guidance range.
- Whether the company comments on dividend cover.