Sainsbury's has cautioned that it anticipates no growth in profits in the upcoming year, attributing this to intensifying competition within the grocery market.
The supermarket giant reported an underlying operating profit of £1.036 billion in its retail sector for the 52 weeks concluding on March 1, representing a 7.2% increase from the previous year's £966 million, as reported by .
The company noted that the double-digit growth observed in its Sainsbury's retail division was somewhat counterbalanced by reduced profits at Argos, which Sainsbury's acquired in 2016.
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This outcome fell well within the company's projected range of £1.01 billion to £1.06 billion.
However, Sainsbury's warned that it expects growth to stagnate in the forthcoming year due to increasing costs impacting its profitability.
The supermarket forecasts its retail underlying operating profit for the 2025/2026 financial year to reach £1 billion, a figure lower than that of the previous year.
This announcement follows Tesco's warning last week that its group adjusted operating profit is expected to decline in the next year, citing a "further increase in the competitive intensity of the 海角视频 market" as the reason.
Recently, Asda, which has experienced a decline in market share over the past year, made notable comments about the 'war chest' available for turning the grocery business around.
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This led to a sell-off in shares of listed grocers Tesco and Sainsbury's, resulting in billions of pounds being wiped off their stock market value.
Robinhood lead analyst Dan Lane commented on Sainsbury's financial performance, stating: "A 7.2 per cent rise in retail underlying operating profit is bang in line with expectations but a flat outlook might be a sign the looming fight with Asda, and contending with NI increases, could be punishing for Sainsbury's."
He further added: "The worry for Sainsbury's should be that a battle between a hungry Aldi and a brakes-off Asda chops down its market share at a time when it has already dropped prices to compete with the German discounter. A price war makes passing recent extra costs, like those NI increases, onto consumers even harder so it looks like Nectar and cost efficiencies are really going to have to pick up the slack."
Lane also reflected on the market shares of Sainsbury's and Asda, saying: "This time five years ago, Sainsbury's and Asda were neck and neck in the market shares stakes with just over 15 per cent each. It's a different scene now and Sainsbury's 0.7 per cent lead is now 2.7 per cent. In reality, Asda had few other levers to pull to makeup for lost time so it's no surprise to see the price war heating up again."
Sainsbury’s announces share buyback and special dividend
In addition to this, Sainsbury's announced a £200m share buyback programme and said it expected to return £250m to shareholders via a special dividend in the second half of the year. This follows a £200m share buyback programme in the 2024/25 financial year.
The supermarket giant stated that the share buyback was a result of its strong balance sheet and cash generation.
Throughout the year, retail sales experienced a 3.1 per cent increase, reaching £31.55bn, while underlying profit before tax saw an 8.6 per cent rise to £761m.
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Group revenue witnessed a 1.8 per cent growth to £32.8bn, and profit after tax surged by 76.6 per cent to £242m.
The company has plans to inaugurate 15 new supermarkets next year, in addition to 25 new convenience stores.
This expansion will place an additional 700,000 people within a ten-minute drive of a Sainsbury's store, according to the company.