The grocer signalled that cost savings and solid trading may not be enough to push earnings higher after four years of heavy investment.
J Sainsbury PLC (LSE:SBRY) expects its underlying retail operating profit to hold steady at around £1bn this year, with no upgrade on last year’s number despite what it described as a strong start to trading in 2025.
The food retail sector has been hit by Rachel Reeve's decision to increase employers' national insurance, while trade tariffs will likely add to the cost of some goods, with a consequent hit to profit margins.
For the year ended March 1, the group said grocery volumes were growing ahead of the wider market, and that it remained confident in its “Next Level” strategy after gaining market share and completing a £1bn investment in price reductions.
However, it noted that profit delivery in the current year would be more heavily weighted to the second half, as the benefit from store expansions and space changes takes time to flow through.
Full-year results showed underlying retail operating profit up 7.2% to £1.04bn.
Group sales, excluding fuel, rose 4.2% to £26.6bn. Statutory profit after tax increased 77% to £242mn, although this was flattered by one-off charges taken in the prior year.
Argos, which is owned by Sainsbury, remained a drag. Full-year sales fell 2.7% and profits slipped, though the division returned to growth in the final quarter. The group said online traffic trends had improved.
Sainsbury confirmed it would return further cash to shareholders, with a new £200mn buyback and a special dividend of £250mn funded from the sale of its banking arm. Any further proceeds from the disposal will be used to boost the buyback beyond the £200mn base.
The company also declared a full-year dividend of 13.6p, up 4% on last year.
Chief executive Simon Roberts said Sainsbury had transformed its customer offer over the past four years, combining price cuts with service and quality to win share from rivals.
He said the group’s Aldi Price Match and Nectar discounts were helping to drive loyalty, while record satisfaction with product availability was also supporting performance.
Roberts said the business had now made its largest investment in new store space in more than a decade and would continue to work with suppliers to maintain its competitive edge.
The tone from Sainsbury contrasts with a more cautious outlook across consumer-facing sectors, where cost pressures, softening demand and ongoing wage inflation have been weighing on forecasts.