Sainsbury’s expects huge full-year profit surge even with trading returning to pre-pandemic patterns


J Sainsbury PLC (LON:SBRY) said trading in the first quarter was ahead of expectations but consumer behaviour is beginning to return to pre-pandemic levels as restrictions ease.

The grocer expects to report underlying profit before tax of at least GBP660mln in the financial year to March 2022, from GBP356mln in the previous period, with progress weighted towards the first half.

READ: Sainsbury’s will gain if discounter roll-out slows says Credit Suisse

The FTSE 100 group said it is on track to launch 1,900 lines this year, introducing 277 new lines in the quarter, including the Aldi price match campaign.

The new, expanded version of the ‘meal deal’ saw sales ahead of expectations and double customer numbers compared to the usual.

It has also established initiatives to help people eat more healthily, such as the Nectar ‘Great Big Fruit and Veg Challenge’, which rewards customers for buying more fruit and vegetables. The plan is to have 83% of food sales ‘healthy or better for you’ by 2025.

“We continue to make good progress against our plan to put food back at the heart of Sainsbury’s and have good momentum within the business,” said chief executive Simon Roberts in a release.

“From today we are reducing prices by GBP50mln on everyday products from strawberries and cherries to bacon and potatoes, helping customers make the most of this summer. I’m delighted that customers are responding to the changes we are making and that we are growing our market share.”

In the 16 weeks to 26 June, grocery sales and clothing rose 0.8% and 57.6% respectively, but total general merchandise was down 1.4% with Argos down 3.4% and Sainsbury’s supermarkets down 11.2%. Total retail sales excluding fuel advanced 1.6%, while fuel rocketed 95.1%.

Home and Furniture sales were strong, boosted by the transition to the Habitat brand and good performance in bedroom and upholstery categories, offset by declines in some categories that performed exceptionally well during lockdown last year such as laptops, TVs, toys, office furniture and outdoor and seasonal products. Global supply constraints also limited customer choice.

The online proposition continued to gain market share and accounted for 18% of total grocery sales, compared to 8% last year, although order numbers have reduced gradually from peak levels as more customers feel comfortable returning to shopping in stores.

Sainsbury’s continues to expand in the online space, with the 60-minute delivery service Chop Chop now available in 49 stores while Uber Eats and Deliveroo are now in 230 stores, an addition of 42 stores in the quarter.


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