After a strong Christmas period, Sainsbury’s will be raising profit forecast for the year to April.
Strong grocery sales from people staying at home meant the group is now expecting pre-tax profits of at least £720m in the year to March 2022.
“We were bold in our plan for product, value, innovation and service and delivered volume growth ahead of the market. We delivered our best value food this Christmas, launched our lowest ever priced Christmas dinner heading into the key Christmas shopping week and we had our biggest ever New Year,” said chief executive Simon Roberts.
“Customers also treated themselves and new Taste the Difference products in party food, desserts, wines and spirits were really popular and we had record sales of champagne and sparkling wines. Offering great value will be more important than ever this year and we have just launched our bold new Sainsbury’s Quality Aldi Price Match campaign, which targets 150 fresh products that customers buy most often.”
Zoe Gillespie, investment manager at Brewin Dolphin, commented: “UK supermarkets faced tough comparisons against Christmas 2020, when lockdown caused a boom in food and drink sales, but the spread of the Omicron variant saw consumers stay away from bars and restaurants last year as well. Sainsbury’s is continuing to deliver strong results on the back of the range of measures it took to improve business performance.”
“Encouragingly, profit guidance has been lifted, cost savings are helping to stave off the effects of increased inflation, and debt reduction is ahead of schedule. Even the supermarket’s banking operation is seeing a turnaround in fortunes. Sainsbury’s is in a good position and that is being reflected in its increased market share and a share price that is up more than 50% since the very beginning of the pandemic – although, it is still off recent peaks.”
Following the report, shares in the group jumped 2% and analysts pointed to the increase in their market share as reason to be optimistic.
“Sainsbury’s is the latest supermarket directly trying to take on the discounters, with massive investment in reducing prices helping the supermarket up its market share,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.