Sainsbury's lifts profit guidance after robust first half

(Sharecast News) - J Sainsbury's posted improved interim sales and profits and lifted annual guidance on Thursday, as robust grocery sales helped offset weaker demand for homewares and clothing.

The supermarket giant, which is in the process of selling general retailer Argos, said underlying sales excluding fuel rose 2.6% in the 28 weeks to 12 September, to £14bn, while underlying operating profits were 3.6% stronger at £525m.

Grocery sales sparked 2.9%, at £13.2bn, driving by ongoing volume growth and lower inflation, while general merchandising and clothing sales fell 3.4% at £800m on the back of a more promotional market and tough comparatives. Sainsbury's, which owns the Tu label, also flagged a "subdued" clothing market.

Fuel sales, meanwhile, rocketed 17.8% to £2.3bn on the back of soaring wholesale prices.

The chain also tweaked its full-year guidance for adjusted profits, in light of the sale of Argos - which is due to complete in early 2027 - and the first interim performance. Previous guidance of £975m to £1.075bn would be equivalent to £965m to £1.065bn once Argos's contribution was stripped out, it said, and that has now been raised to £1.025bn and £1.065bn.

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 a great value, outstanding quality and exciting new food across our ranges, we're looking forward to helping customers enjoy a really special Christmas."

Sainsbury's agreed to sell Argos to Swift Partners in July for at least £120m, a decade after it acquired the business for £1.4bn. Argos is one of the high street's most recognisable names, but Sainsbury's - which is looking to refocus on its core supermarket business - has long looked to offload the brand, which has struggled to grow in an ultra-competitive market.

Sainsbury's in the UK's second-largest supermarket chain after Tesco.

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