3rd Nov 2022 09:11
(Alliance News) - J Sainsbury PLC on Thursday reported its half-year profit dropped, despite revenue growth, amid ongoing grocery inflation.
Pretax profit in the 28 weeks to September 17 fell by 30% to GBP376 million from GBP527 million, the London-based grocer said, blaming high inflation.
September fresh food prices were 12% higher than in September 2021, according to British Retail Consortium-Nielsen Shop Price Index data. In October, they rose to 13% higher than a year ago, data from the index showed on Wednesday.
Food inflation in general was at 11% in September and 12% in October.
"Grocery inflation in the market increased during the period, but we continued to prioritise value for customers, inflating behind all key competitors," Sainsbury's said. It added that it will have invested more than GBP500 million by March 2023 in keeping prices lower via cost-cutting measures.
Revenue grew 4.4% year-on-year to GBP16.41 billion from GBP15.72 billion.
It said grocery sales grew 0.2% in its first half overall, and by 3.8% in the second quarter as tough lockdown comparatives eased. General merchandise decreased by 6.1% to GBP2.9 billion from GBP3.1 billion a year prior.
Meanwhile, fuel sales grew 40% to GBP3.4 billion from GBP2.4 billion. Retail excluding fuel fell by 1.3% to GBP14.7 billion from GBP14.9 billion.
Sainsbury's will pay an interim dividend of 3.9 pence per share, up 22% from 3.2p a year before, and backed its annual underlying pretax profit guidance of GBP630 million to GBP690 million.
It expects annual retail free cash flow generation of "at least GBP500 million".
"We are well placed through the peak trading period and into next financial year to support customers as they manage further cost of living pressures. We are half way through a GBP1.3 billion cost saving programme that has doubled the run rate of previous years and we are confident in our competitive position in the face of macro challenges and operating cost inflation," Sainsbury's said.
The company said that trading momentum stayed strong in the first weeks of the second half, with continued volume market share gains.
Over the four weeks ending October 2, The market share of Sainsbury fell to 14.7% from 14.9% a year before, survey figures from data analytics firm Kantar showed on October 11.
Sainsbury's shares were 3.9% higher at 205.52 pence each in London on Thursday morning.
By Tom Budszus; [email protected]
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