By James Davey
LONDON (Reuters) – Sainsbury’s, Britain’s second largest supermarket group, forecast up to 10% growth in retail operating profit in its new financial year, confident that its strategy would help it outperform rivals.
The group, which has a 15.3% share of Britain’s grocery market trailing only Tesco, beat company guidance for profit in its 2023/24 year as it won customers from rivals.
In recent years Sainsbury’s has matched discounter Aldi’s prices on essential items and provided better offers for members of its Nectar loyalty scheme, financed by cutting 1.3 billion pounds ($1.62 billion) of costs over the last three years.
In February it set a new three-year cost savings target and vowed to step-up capital expenditure and boost returns for shareholders.
In the year to March 2 2024 it posted underlying pretax profit of 701 million pounds – ahead of guidance of between 670 million and 700 million pounds and the 690 million pounds made in 2022/23.
“We are confident of delivering strong profit growth in the year ahead. We expect to continue to grow grocery volumes ahead of the market, driving profit leverage,” Sainsbury’s said, guiding to retail underlying operating profit of between 1.01 billion pounds and 1.06 billion pounds, growth of 5% to 10%.
It said its strong momentum in grocery had continued into the new financial year.
Sainsbury’s total sales in 2023/24 were up 3.4% at 36.3 billion pounds, while fourth quarter like-for-like sales, excluding fuel, were up 4.8%, having been up 7.4% in the Christmas quarter.
Monthly industry data published Tuesday showed Sainsbury’s was the fastest growing of Britain’s traditional supermarkets, with its market share up 40 basis points year-on-year.
In grocery, the group said it also benefited from new product launches that tapped into the continuing trend of consumers wanting to save money by cooking and entertaining at home rather than eating out.
It launched nearly 1,200 new products in the year and sales of its premium ‘Taste the Difference’ range increased 12%.
($1 = 0.8018 pounds)
(Reporting by James Davey; Editing by Kate Holton)
