Sainsbury's has on Thursday announced its half year results, reporting strong growth in the second quarter.
However, like-for-like sales (excluding fuel) were down 0.8 per cent for the half year ended on 17 September, with Q2 up 3.7 per cent after a decline of 4 per cent in Q1.
Retail operating profit was down 9 per cent, reflecting the supermarket’s investment in value, reduced grocery and general merchandise volumes post-pandemic and higher operating costs. Underlying profit before tax stood at £340 million, down 8 per cent.
Chief executive Simon Roberts, however, noted that profits are significantly higher than pre-Covid levels and the company is generating strong cash flow, supporting debt reduction and dividend payments.
He added that the company would be investing more than £500 million by March 2023 to keep prices lower amid the cost of living crisis.
“Over the past year and a half we have consistently passed on less price inflation than our competitors and I am confident we have never been better value,” Roberts said.
The group retained its guidance for the full year, expecting underlying profit before tax of between £630 million and £690 million in 2022-23.
Commenting on the results, Charlie Huggins, head of equities at Wealth Club, said: “These are solid enough results from Sainsbury's, but it is difficult to get excited. It’s just such a tough industry, with fierce competition, fickle consumers and thin margins.
“[Sainsbury's] has lowered prices and significantly increased online capacity. But all this comes at a cost. With the economy being strangled by higher interest rates and inflation, Sainsbury’s will have to run very hard just to stand still.”