J Sainsbury (LON: SBRY), the UK supermarket group, has seen its shares fall around 3.8% in early Thursday trading after it raised the floor of its full-year profit guidance with first-half underlying operating profit from continuing operations rising 3.6% to £525m. The figures, for the 28 weeks to the 12th of September, were published in its results today.
Sainsbury’s now expects underlying operating profit from continuing operations of £1,025m to £1,065m. The previous range works out at £965m to £1,065m on the same basis. Free cash flow is still guided at more than £500m.
Continuing sales excluding fuel rose 2.6% to £14.0bn. Grocery sales of £13.2bn grew 2.9% on higher volumes and lower inflation, while fuel sales of £2.3bn jumped 17.8% as Middle East conflict lifted wholesale prices. General merchandise and clothing, at £0.8bn, fell 3.4%.
Chief executive Simon Roberts said:
more people are choosing us for their weekly shop, driving continued volume growth in the first half.
Simon Roberts, chief executive, J Sainsbury
The catch is momentum. Like-for-like sales excluding fuel, which measure growth in stores open more than a year, rose 1.9% over the half, but the second quarter managed 1.2% against 2.3% in the first. Underlying operating margin eased to 3.23% from 3.25%.
The statutory result was a loss after tax of £164m, against a £155m profit a year earlier. Discontinued operations lost £376m, including a £317m loss on the Argos disposal: a £215m impairment and a £102m separation provision. The loss on classifying Argos as held for sale is non-cash. Continuing profit after tax rose 11.6% to £212m.
The Argos sale to Swift Partners was agreed on the 31st of July. Completion is expected by the end of February 2027 and full separation by February 2029. Argos sales fell 1.8% excluding Marketplace, and its full-year trading profit is expected in line with or ahead of last year.
Free cash flow was £333m, up from £276m. Sainsbury’s has completed £200m of its £300m share buyback, with £100m to come in the second half. The interim dividend is unchanged at 4.1p, payable on the 18th of December to shareholders on the register on the 13th of November.
The company expects the market to stay very competitive and says it will keep investing in value, quality, availability and service. Its third-quarter trading statement is due at 7am on the 8th of January.