23rd Apr 2026 09:36
(Alliance News) - J Sainsbury PLC on Thursday warned that the US-Israel war on Iran could hurt profit in the financial year ahead as it delivered guidance that fell short of market hopes.
"The conflict in the Middle East will impact both our customers and our business. The duration and extent of these impacts is very uncertain and this is reflected in our profit guidance," Sainsbury said in a statement.
In response, shares in the London-based food retailer fell 4.8% to 336.00 pence each in London on Thursday morning, a prominent faller in the FTSE 100 index, which was down 0.4%.
Sainsbury, the UK's second largest grocer behind Tesco PLC, said pretax profit rose 2.0% to GBP619 million in the 52 weeks to February 28 compared to GBP607 million in the prior year.
Underlying pretax profit grew 1.3% to GBP718 million from GBP709 million on-year but was below GBP730 million company-compiled market consensus.
Retail underlying operating profit slipped to GBP1.03 billion from GBP1.04 billion, broadly in line with consensus.
This reflected significant operating cost inflation and "investment in value" in a more competitive market, J Sainsbury said.
"Rather than pass through the full extent of cost inflation, we invested to sustain the strength of our competitive position," Chief Executive Simon Roberts explained.
The CEO pledged to do "everything we can" to support customers over the coming months, with "absolute focus on keeping prices low".
"The conflict in the Middle East means customers are even more focused on the cost of living and we are absolutely committed to making sure everyone gets the best possible value when they shop with us," he added.
Retail sales, excluding VAT and fuel, climbed 4.3% to GBP29.99 billion from GBP28.75 billion on-year, versus GBP29.92 billion market consensus.
Grocery sales grew 5.2% for the year, with "consistently strong volume growth and market share gains through the year," the firm said.
But Grocery sales growth slowed to 4.5% in the fourth quarter of the year from 5.4% in the prior quarter and was the weakest three month period of the financial year.
General Merchandising sales rose 1.3% on-year and Argos sales increased 0.7%. Both divisions returned to growth in the fourth quarter after declines in the prior three months.
Group revenue, excluding VAT but including fuel, increased 2.7% to GBP33.65 billion from GBP32.77 billion.
Looking ahead, Sainsbury said it is in a "strong competitive position" after another year of good progress.
"We have made a positive start to the new financial year, with grocery volume growth ahead of the market. Argos trading continues to reflect a subdued general merchandise market," it added.
But guidance for the current financial year fell short of market consensus.
Sainsbury said it currently expects to deliver underlying operating profit of between GBP975 million and GBP1.08 billion, short of GBP1.1 billion current consensus.
The grocer continues to expect to deliver retail free cash flow of more than GBP500 million, compared to GBP574 million in the financial year just ended.
Sainsbury declared a final dividend of 9.6 pence per share, down from 9.7p a year ago, making the total payout 13.7p per share, up from 13.6p a year ago. It also said it will return this year an additional GBP100 million of the proceeds from the sale of its banking subsidiary. This will be done as a share buyback and will increase its total buyback programme for this year to GBP300 million from GBP200 million.
By Jeremy Cutler, Alliance News reporter
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