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J Sainsbury said it would report higher profits than previously forecast for the year to April after a strong Christmas, with a better than expected performance in its general merchandise and financial services businesses.
The UK’s second-largest supermarket chain expects to make at least £720m of underlying pre-tax profit, up from a previous forecast of £660m made in July.
Low prices and higher operating cost inflation would be “offset by structural cost savings and stronger than expected grocery volumes”, the company said.
Argos, the general merchandise chain that increasingly operates from within Sainsbury’s supermarkets, benefited from “stronger margins supported by transformational operating cost reductions” while the previously troublesome Sainsbury’s Bank was “performing ahead of expectations”.
For the six weeks to January 8, grocery sales were 0.1 per cent ahead of last year, but 6.8 per cent ahead of the same period two years ago. Total sales were down 2.9 per cent on last year, but up 2.4 from two years ago. The year-on-year comparisons were affected by the decision to close all stores on Boxing Day in 2021.
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