By James Davey
LONDON (Reuters) -Sainsbury’s, Britain’s second-biggest supermarket group, said trading momentum was strong over the last month and it was well placed for Christmas, with shoppers starting to stock up on festive treats earlier.
Shares in the company rose 3% in early trading, after the group posted its first-half results and stuck to its forecasts for the year.
Chief Executive Simon Roberts told reporters that consumers were spreading out their Christmas spending to try to cope with rising household bills.
He said they were also buying more own brand goods and choosing to treat themselves at home rather than eat out.
As a cost of living crisis worsens, consumers have cut their spending. With inflation at a 40-year high of 10.1%, and food inflation at 14.5%, consumer confidence is close to the gloomiest on record.
But Sainsbury’s said trading had been strong in the first few weeks of its second half, which started in mid-September, and it had made market share gains on a volume basis.
It said that reflected the investment it had made in its offering, with customer perception of its value and quality improving.
Richard Hunter, head of markets at interactive investor, called the grocer’s statement promising: “After a weak first quarter, Sainsbury has seen something of a resurgence in the second.”
The group, which holds a 14.7% share of Britain’s grocery market, said it still expected 2022-23 underlying pre-tax profit of between 630 million and 690 million pounds ($718-$786 million), down from the 730 million pounds it made in 2021-22.
Prior to Thursday’s update analysts were on average forecasting 637 million pounds.
Sainsbury’s reported underlying pre-tax profit of 340 million pounds for the 28 weeks to Sept. 17, an 8% fall.
Second-quarter like-for-like sales, excluding fuel, rose 3.7%, following a 4% fall in the first quarter.
Market leader Tesco lowered its profit expectations last month, while in September, Morrisons, the Co-operative and Aldi UK all reported profit falls.
Analysts see Sainsbury’s, whose shares have fallen 26% this year, as more challenged than other supermarket groups because it owns the Argos general merchandise business – an area more exposed to pressure on consumers’ disposable income.
(Reporting by James Davey; editing by Sarah Young and Jason Neely)
