J Sainsbury plc (LON: SBRY) has raised the lower end of its full-year profit guidance after reporting stronger first-half earnings, supported by grocery sales growth, increased customer volumes and cost savings as the supermarket group prepares to focus more heavily on its core food business.
The retailer now expects underlying operating profit from continuing operations of between £1.03 billion and £1.07 billion, compared with its previous equivalent guidance of £965 million to £1.07 billion, excluding Argos.
For the 28 weeks ended 12 September 2026, underlying operating profit increased 4% to £525 million, up from £507 million a year earlier, while underlying pre-tax profit rose 5% to £366 million.
Sales from continuing operations excluding fuel increased 3% to £14 billion, driven by grocery revenue growth of 3% to £13.2 billion. General merchandise and clothing sales declined 3% to £777 million.
Like-for-like sales excluding fuel rose 2%, with Sainsbury’s reporting continued growth in shopping volumes and market share as customers responded to its pricing strategy and expanding food ranges.
The supermarket’s Nectar Prices and Aldi Price Match programmes continued to support customer demand, alongside investment in product quality, availability and service.
Sales of Sainsbury’s premium Taste the Difference range increased by more than 6%, while online grocery sales climbed 9%, reflecting continued demand for digital shopping services.
The company also invested in more than 170 stores during the first half, expanding product ranges and improving the shopping experience.
Free cash flow increased to £333 million from £276 million, leaving Sainsbury’s on track to generate more than £500 million for the full financial year.
The stronger cash performance has supported shareholder returns, with the company completing £200 million of its planned £300 million share buyback programme.
Sainsbury’s also maintained its interim dividend at 4.1 pence per share, reinforcing its commitment to returning capital to investors.
However, the group reported a statutory loss after tax of £164 million, compared with a £155 million profit a year earlier, primarily reflecting losses associated with discontinued operations following the agreed sale of Argos.
The transaction, involving the sale of Argos to Swift Partners, is expected to complete by the end of February 2027.
The disposal forms part of Sainsbury’s strategy to simplify its operations and concentrate investment on its core grocery business, where management believes it can generate stronger long-term returns.
Chief Executive Simon Roberts said the supermarket was attracting more customers for their weekly shopping as households continued to face pressure on disposable incomes.
He highlighted the company’s focus on competitive prices, improved food quality and product innovation, including the expansion of its Taste the Difference Discovery and Full on Fibre ranges.
Roberts also emphasised the importance of long-term relationships with British farmers and suppliers in maintaining product availability and affordability.
For investors, the improved profit guidance, stronger cash flow and continued grocery market share gains demonstrate progress in Sainsbury’s food-focused strategy, despite weaker general merchandise sales and the statutory loss associated with Argos.
The retailer enters the important Christmas trading period with management expressing confidence in its ability to maintain customer growth through competitive pricing and an expanded premium food offering.
Attention will now turn to Christmas trading performance, completion of the Argos sale and delivery of the upgraded £1.03 billion to £1.07 billion profit outlook, as Sainsbury’s continues its transition towards a simpler, food-led business.
