Sainsbury's profits double, but retailer warns of fall in current year

Supermarket group Sainsbury's followed rivals in warning of lower profit for the current year due to soaring inflation, taking the shine off a more than doubling in profit for its 2021-22 year.

Sainsbury's, Britain's second largest grocer after Tesco, said on Thursday its underlying profit before tax in 2022-23 was expected to be between £630-690 million. Analysts on average had been expecting £703m for 2022-23.

The group made underlying profit before tax of £730m in the year to March 5, 2022, up 25 per cent versus 2019-20 fiscal and up 104 per cent versus 2020-21, which included substantial Covid-19 costs.

Grocery sales were up 7.6 per cent from 2019-20 and broadly flat from last year, reflecting sustained Covid-19-driven demand. However, general merchandise sales were down 4.6 per cent from 2019-20 and 11.9 per cent from last year, which the groups said was due to availability challenges in key product areas.

“We have outperformed key competitors on both a one and two-year basis while also delivering strong underlying profit growth, improved returns and consistent retail free cash flow. This gives us a strong foundation to keep building momentum in the year ahead,” Simon Roberts, Sainsbury's chief executive, said.

“We have a clear long term focus on keeping prices low and we remain committed to helping everyone eat better, whatever the external environment may bring.”