Sainsbury’s tipped to trim profit forecast as UK shoppers struggle

Supermarket group Sainsbury’s looks likely to follow market leader Tesco and lower its full-year profit sights when it reports half-year results next week, analysts’ forecasts indicated today (27).

At a first quarter trading update in July, Sainsbury’s kept its forecast for underlying profit before tax of between 630 million and 690 million pounds for the year to March 2023, down from the 730 million pounds made in 2021-22.

However, according to analysts’ forecasts published on the Sainsbury’s website, which was updated on Oct. 6, the average estimate is 637 million pounds, with the highest at 655 million.

Sainsbury’s house broker Shore Capital is forecasting 636 million pounds. It notes that with UK consumers facing higher food and energy costs in the second half demand is likely to remain weak.

A Sainsbury’s spokesperson declined to comment on its guidance.

UK consumers have been reining in spending with inflation hitting 10 per cent. They also expect a tighter squeeze in 2023 after finance minister Jeremy Hunt scrapped tax cuts previously planned by former Prime Minister Liz Truss and scaled back her vast energy support scheme for households.

A survey published this month showed UK consumer confidence remained close to a record low as households responded to the combination of high inflation and chaotic politics.

Analysts see Sainsbury’s as more challenged than other supermarket groups because it owns the Argos general merchandise business – an area more exposed to cutbacks in discretionary spending.

Meanwhile, 1.8 million customers of the store who shop with Sainsbury’s will see the number of points they earn slashed from next week. Instead of earning two Nectar Points per £1 spent on your shop when paying with a Sainsbury’s Bank credit card, they will earn just one for every £2 spent.

“While we understand this offer is popular with card holders, we are certain that all customers will continue to find great value and to save money with Sainsbury’s through our low-priced food, competitive financial services and affordable Argos and Habitat brands,” reports quoted a Sainsbury’s spokesperson as saying.