Sainsbury’s H1 Earnings Preview: Shore Capital says Full-Year Forecasts “Well Underpinned”

Shore Capital told investors in a note that Sainsbury’s (LON:SBRY) full-year forecasts look secure ahead of first-half results on Oct. 22, the supermarket’s first set of figures to exclude Argos following the agreed sale.

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Analyst Clive Black forecasts first-half operating profit of £525 million, up about 4% year over year. He sees full-year operating profit of £1.07 billion and pretax profit of £750 million as “well underpinned.”

Sainsbury’s, a corporate client of Shore Capital, has guided to a group EBIT range of £975 million to £1.075 billion.

Argos will be treated as an asset for sale and excluded from continuing operations. The disposal, which Sainsbury’s expects to bring in about £120 million, is due to complete in February 2027.

“Sainsbury found a good home for Argos, and now more focused with asset backing, and cash generative, we view the Group as even better set-up to see through the potential of its Food First Strategy,” Black wrote.

Grocery sales rose 3.6% in the first quarter. Black believes the second quarter started well, helped by sunshine and the FIFA World Cup, before quieting down on lower-than-expected food inflation and no boost from staycations. He expects food inflation to build gradually toward a 3% to 5% range.

Shore Capital also flagged growing pressures on UK consumers, including diesel back near 200 pence a liter and a possible 25% rise in home energy costs in January.

The shares trade at 14.4 times Shore Capital’s fiscal 2027 earnings estimate, with a 4.2% dividend yield.

“If the UK consumer economy cools, Sainsbury’s equity should be a good non-discretionary hedge, should matters be more sanguine, the shares can also harvest a healthier demand for higher category food,” the analyst concluded.