Investing.com -- Sainsbury's on Thursday raised the lower end of its full-year profit guidance after first-half underlying operating profit from continuing operations rose 3.6% to £525 million. The U.K. grocer now expects full-year underlying operating profit of £1.025 billion to £1.065 billion, up from £965 million at the low end, on a comparable basis excluding Argos.
However, the company's shares fell nearly 4%, potentially due to a deceleration in like-for-like sales.
The company said the first half was driven by volume growth, cost savings and steady investment in value, quality and service. Underlying profit before tax rose 5.2% to £366 million, and underlying earnings per share rose 10.4% to 11.7 pence.
Sales, excluding fuel, rose 2.6% to £14 billion. Grocery sales rose 2.9% to £13.2 billion, while general merchandise and clothing sales fell 3.4%. Like-for-like sales excluding fuel rose 1.9% in the half, but growth slowed to 1.2% in the second quarter from 2.3% in the first.
Sainsbury's said it expects the market "to remain very competitive and we will make deliberate, balanced choices to sustain the strength of our offer, investing in value, quality, availability and service."
Statutory results swung to a loss after tax of £164 million, from a £155 million profit a year earlier, because of a £376 million loss from discontinued operations. Sainsbury's has agreed to sell Argos to Swift Partners, with the deal expected to close by the end of February 2027, and Argos is now reported as a discontinued operation.
Free cash flow was £333 million, and the company expects more than £500 million for the year. It has completed £200 million of its £300 million share buyback, with the rest due in the second half.
Chief Executive Simon Roberts said that "more people are choosing us for their weekly shop." He pointed to the Nectar Prices loyalty scheme and the biggest Aldi Price Match in the market. Taste the Difference sales rose more than 6%, and fresh food sales grew 4.3%.
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