Sainsbury's boosts full-year guidance as sales jump

(Sharecast News) - J Sainsbury boosted its full-year outlook on Thursday, after strong grocery sales throughout the first half. The supermarket chain, which also owns Argos, said grocery sales in the 28 weeks to 16 September were ahead 10.1%, while general merchandise sales nudged up 1.1%.

Sales at Argos rose 1.7%, but clothing sales were down 8.4%, hit in part by the unseasonable weather.

On a like-for-like basis, sales excluding fuel were up 8.4%.

Group revenues excluding VAT were 3.5% higher at £17bn, but underlying pre-tax profits were flat at £340m, after financial services profits fell sharply, down 32% to £13m. Sainsbury said the division had been impacted by higher costs, as well as customers regularly paying off credit card balances.

Sainsbury said it had gained volume from grocery competitors during the period, enabling it to grow ahead of the market and make "record" market share gains.

Looking to the current half, it added that "strong trading momentum" had continued in recent weeks and it now expected underlying pre-tax profits to come in between £670m and £700m, at the upper end of its previous guidance for between £640m and £700m.

It also forecast retail free cash flow of at least £600m, up from earlier guidance for at least £500m.

Simon Roberts, chief executive, said: "Food is firmly back at the heart of Sainsbury's.

"We know people are still finding things tough and we're working harder than ever to reduce our costs.

"We're ready to give customers at Sainsbury's and Argos everything they want to have a brilliant Christmas. As we head into this key trading period, we are encouraged by our strong momentum and we remain fully focused on delivering for customers and shareholders."