Sainsbury’s shares rose on Thursday after the supermarket released a robust set of results for the year to 1st March 2025.
The company’s focus on groceries has resulted in Sainsbury’s achieving its highest market share gains in more than a decade, which was evident in the numbers for the period.
Sainsbury’s reported full-year sales (excluding fuel) of £26.6 billion, up 4.2%, despite Argos experiencing a 2.7% decline to £4.9 billion and fuel sales dropping 8.9% to £4.7 billion.
Sainsbury’s Q4 sales grew 4.1% and Argos rebounded with 1.9% growth in Q4. The uptick in Argos sales is encouraging.
From a profitability perspective, the company delivered retail underlying operating profit of £1,036 million, up 7.2%, driven by double-digit growth in the Sainsbury’s business that helped offset lower Argos profits.
Statutory profit after tax increased significantly by 77% to £242 million, though this was impacted by non-underlying costs of £297 million related to Financial Services restructuring and retail reorganisation.
Sainsbury’s maintained strong cash generation with retail free cash flow of £531 million. Strong cash generation supported a fresh £200 million share buyback program, and increased its full-year dividend by 4% to 13.6 pence per share.
“After putting the majority of its eggs back in the grocery basket, Sainsbury’s renewed focus on what made it a dominant supermarket force has largely paid off,” said Mark Crouch, market analyst at investment platform eToro.
While investors will be pleased with results over the past year, there will be some concern about the outlook. The company said it expects retail underlying profit to be around £1 billion in 25/26, which is broadly the same as the £1.03bn recorded in 24/25.
“Looking ahead, guidance looks quite conservative at around 8% below market expectations, pointing to broadly flat revenue and profit this year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“That echoes conservative guidance from Tesco last week, and gives Sainsbury plenty of wiggle room to get its hands dirty if competition with the likes of ASDA and Tesco heats up. But shy of an all-out price war, there could be room for positive surprises as the year progresses. Shareholder returns remain a key part of the investment story though, with a new share buyback announced and plans to funnel the proceeds from its bank disposal back to investors via a special dividend.”
The share buyback and the relatively low level of the shares going into results will have played a part in shares rising on Thursday. Should the stock have been trading near the top of the recent range, we’d likely have seen shares sell off on the uninspiring outlook.
Sainsbury’s shares were 1% higher at the time of writing.