Shore Capital expects J Sainsbury PLC (LSE:SBRY) to have “completed a more than satisfactory” first half when it posts its interims next month but is less optimistic for the financial year 2024.
Analysts at the bank kept their pre-tax profits for the year unchanged at £636mln, in line with the group’s guidance of £630mln to £690mln.
Sainsbury’s faces several external challenges, said the broker, including rising grocery inflation, which reached a record high last month, and falling living standards for many.
Kwasi Kwarteng’s budget will apply “some soothing cream,” with the reversal of National Insurance increases and the energy cap provided hopefully freeing up some cash for consumers.
Additionally, the broker believes it navigated the spring and summer periods well, with its core grocery business being “effective” while Argos didn’t suffer as much as initially feared.
Forecasts for the financial year 2024 may be hit as the macro factors continue to pile up, the analysts believe.
Mainly, more households will be falling off fixed-rate mortgages to new elevated levels, while food inflation and energy costs are expected to remain high, it said.
With that being said, pre-tax profits for financial 2024, according to Shore Capital’s estimates, will be £636mln, so flat year-on-year.