Sainsbury’s has indicated that profits will be flat over the next year as it faces intensifying competition from rivals on price and a surge in costs.
It came as the UK’s second largest supermarket chain reported that sales and profits grew over the year to March.
The retailer said full-year sales, excluding fuel, rose by 4.2 per cent to £26.6 billion as it increased its share of the UK grocery market.
Meanwhile, retail underlying operating profits rose by 7.2 per cent to £1.03 billion for the year.
It told shareholders that these profits will be about £1 billion for the new financial year as stronger sales volumes are expected to be offset by weaker profitability.
Earlier this month, rival Tesco said it would see weaker profits as it sets more money aside to invest in price cuts.
It comes amid pressure from Asda, the UK’s third largest chain, after its returning boss Allan Leighton said it would slash prices in a bid to turn around its fortunes.
On Thursday, Sainsbury’s said it was growing market share after investing £1 billion in improving its pricing.
The company also said it was launching its “biggest investment in expanding our store space in over a decade”, with about 40 new stores opening this year.
Grocery sales grew by 4.5 per cent for the past year, while sales at its Argos arm slipped by 2.7 per cent to £4.9 billion.
However, the retailer said it has started the new financial year with “good trading momentum” across all its brands after Argos grew in the final quarter.
It came as the UK’s second largest supermarket chain reported that sales and profits grew over the year to March.
The retailer said full-year sales, excluding fuel, rose by 4.2 per cent to £26.6 billion as it increased its share of the UK grocery market.
Meanwhile, retail underlying operating profits rose by 7.2 per cent to £1.03 billion for the year.
It told shareholders that these profits will be about £1 billion for the new financial year as stronger sales volumes are expected to be offset by weaker profitability.
Earlier this month, rival Tesco said it would see weaker profits as it sets more money aside to invest in price cuts.
It comes amid pressure from Asda, the UK’s third largest chain, after its returning boss Allan Leighton said it would slash prices in a bid to turn around its fortunes.
On Thursday, Sainsbury’s said it was growing market share after investing £1 billion in improving its pricing.
The company also said it was launching its “biggest investment in expanding our store space in over a decade”, with about 40 new stores opening this year.
Grocery sales grew by 4.5 per cent for the past year, while sales at its Argos arm slipped by 2.7 per cent to £4.9 billion.
However, the retailer said it has started the new financial year with “good trading momentum” across all its brands after Argos grew in the final quarter.
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NewsTranscript
00:00Are British shoppers about to benefit from a supermarket price war? It certainly looks
00:05that way. Sainsbury's have warned shareholders they expect profits to be flat this year as a
00:09result of increased competition. Don't feel too sorry for them, they're still expecting about
00:13a billion pounds in profit. But it follows a similar warning by Tesco and it comes on the
00:18back of Asda reintroducing rollback pricing as part of their attempts to win back customers
00:24after some recent struggles. All of those big chains have been facing a lot of competition in
00:29recent years from the likes of Aldi and Lidl who've been gradually chipping away at their market share.
00:34Now the likes of Sainsbury's are saying they match more prices, more products to Aldi's and are also
00:42making big play of loyalty schemes like Nectar cards. Interested to hear what people think,
00:46are you seeing prices becoming more competitive in supermarkets or do they still need to be fairer for shoppers?