J Sainsbury PLC (LSE:SBRY) shares were up 4% in early trading after the supermarket said it expects profits to hold steady this year at around £1 billion.
The group is forecasting retail underlying operating profit in line with last year, despite facing rising national insurance costs and growing fears of a global trade war.
The tone of the update was confident, with management pointing to strong grocery volume growth and momentum across all its brands.
And Sainsbury essentially avoided the warning larger rival Tesco PLC (LSE:TSCO) delivered last week after it forecast a decline in profitability.
Investors appeared reassured by the steady outlook and the promise of continued cash returns, including a new £200 million share buyback and a £250 million special dividend.
Shore Capital’s Clive Black said there could still be room for upgrades later in the year, noting that “a rational market could see upward revision in time.”
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 £1 billion 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 £1.04 billion.
Group sales, excluding fuel, rose 4.2% to £26.6 billion. Statutory profit after tax increased 77% to £242mn, although this was flattered by one-off charges taken in the prior year.
The stock rose 9p to 257p.