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(Sharecast News) - UK supermarket chain Sainsbury's held annual guidance despite slower first quarter sales as the war in Iran and Lebanon continued to cause uncertainties for customers.
Like-for-like sales excluding food in the in the 16 weeks to June 20 rose 2.1%, down from the previous quarter's 3.1% and estimates of 2.7%.
The company still expects to deliver total underlying operating profit of between 975m - 1.075bn and retail free cash flow of more than 500m.
Grocery sales rose 3.6%, while general merchandise and clothing sales fell 3.7%. Sales at the Argos catalogue business fell 0.5%.
Sainsbury's faced a tough comparative in the first quarter of 2025 when like-for-like sales rose 4.7%, driven by good weather and cyberattacks at competitors Marks & Spencer and the Co-op which caused massive disruption and [ushed shoppers to seek alternatives.
The company said it would make "make deliberate, balanced choices to sustain our strong competitive position" and expected to continue to outperform the grocery market.
"We have had an encouraging start to the year but the impact of the conflict in the Middle East on our customers and our business remains uncertain," Sainsbury's said in a trading statement on Tuesday.
AJ Bell head of markets Dan Coatsworth said: "Argos shifted a load of fans to cool people down during the May heatwave, and no doubt did the same in recent days as temperatures soared."
"Football fans also used the World Cup as an excuse to buy a new TV, no doubt justifying the purchase on the need to see the matches on a bigger screen and in better resolution. Take those sales drivers away and Argos might have been in the doldrums."
"A marketplace service will launch on Argos later in the year. That will extend the choice to customers but won't necessarily be the solution to Sainsbury's problems. The strategy could easily backfire if shoppers get frustrated that certain items are only available from third party suppliers and not stocked in Argos concession stands inside Sainsbury's stores."
"If someone wanted a massive range of items and is happy to buy online and have it delivered to their home, why would they choose Argos over Amazon? It's hard to believe that Argos will suddenly prosper just because there is a broader range of products. After all, Argos already has a comprehensive offering."
Reporting by Frank Prenesti for Sharecast.com
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