Sainsbury's ups profit view but second quarter sales underwhelm

J Sainsbury PLC on Thursday lifted its profit outlook as it reported "volume growth, share gains and profit growth" in its half-year, but shares struggled as its second quarter sales rose at a softer pace than expected.

Shares in J Sainsbury were down 3.8% to 346.30 pence per share on Thursday morning in London.

The London-based grocer said pretax profit from continuing operations in the 28 weeks to September 12 improved 7.7% to £306 million from £284 million, with revenue up 4.1% to £16.24 billion from £15.60 billion.

Excluding fuel, total sales from continuing operations were 2.6% higher at £13.96 billion, up from £13.61 billion a year earlier.

Half-year underlying operating profit climbed 3.6% to £525 million from £507 million, Sainsbury's said.

Argos has been classed as a discontinued operation. In July, Sainsbury's said it agreed to sell the unit to Swift Partners for at least £120 million. Sainsbury's acquired Argos in 2016 for £1.4 billion.

"The consistent strength of our customer offer helped deliver volume growth, share gains and profit growth in the first half," the company said.

By category, Sainsbury's Grocery sales rose 2.9% year-on-year, while General Merchandise & Clothing sales declined 3.4%.

Sainsbury's said its like-for-like sales excluding fuel climbed 1.9% year-on-year in the first half. In the second quarter alone, growth was 1.2%, shy of company-compiled consensus of 1.9%.

Sainsbury's maintained its interim dividend at 4.1 pence per share.

The firm's underlying operating profit guidance before the half-year results ranged from £975 million to £1.08 billion.

This was equivalent to £965 million to £1.07 billion on a continuing operations basis, excluding Argos.

Sainsbury's has lifted the lower end of that range to £1.03 billion. It still expects to deliver free cash flow of more than £500 million.

Underlying operating profit in financial 2026 amounted to £1.03 billion.

Chief Executive Simon Roberts said: "As we progress the sale of Argos and further sharpen our focus on food, we are building a simpler, more focused Sainsbury's. With great value, outstanding quality and exciting new food across our ranges, we're looking forward to helping customers enjoy a really special Christmas."

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