Sainsbury’s has reported a healthy 7.2% increase in operating profit; however it is forecasting underlying profit for 2025/26 to be in the order of £1 billion ($1.3 billion)—slightly down by £36 million ($47.6 million) on the year to March 1st. The supermarket reported it is on track to deliver a further £1 billion ($1.3 billion) in cost savings by the financial year 2026/27.
The U.K. supermarket chain also advised that its £200 million ($265 million) share buyback programme is complete, with a full-year dividend of 13.6 pence (0.18 dollars), up 4% year-on-year.
As the grocer gears up for a price war, it is reporting a £800 million ($1.6 billion) capital expenditure budget, much of which will be used to invest in technology to drive growth, loyalty, and better availability.
This investment in technology is especially highlighted in the claim by CEO Simon Roberts that they are taking their loyalty scheme, Nectar, “to the next level”. Named Nectar 360, the development mirrors the trend in the industry towards utilising retail media, promising tailored and targeted propositions, market-leading personalisation, and an integrated digital experience. Roberts hopes that this will deliver an incremental profit of £100 million ($130 million) by 2026/27.
Commenting on the results, Roberts said: “We’ve built resilience and created sustainable competitive advantage across our customer offer, our operations, and our technology platform.
We are stronger, more agile, and we have the capabilities to win in this market, and these are not capabilities that you can build or deliver sustainably overnight”, he continued.
This set of results, or rather, the underlying strategy behind them, serves to illustrate that top-line numbers never tell the whole story. Profit outlook may have flatlined in the face of a £1 billion ($1.3 billion) investment in price as the supermarket price war looks set to heat up, however, Sainsbury’s are well-placed to navigate not only these headwinds but the cost challenges presented by the Budget measures and the introduction of the Extended Producer Responsibility (EPR) in October this year.
Doubling down on liberating more space for grocery at the expense of clothing and general merchandise also appears to be a strong move. On their planned space increase, Roberts commented that, “With 40 store openings planned for this year, we are moving at pace and with confidence as we focus on delivering this next phase of our growth as we bring the best of our food offer to more customers”.
And this prudent, disciplined, but at the same time, aggressive approach appears to be paying off, Roberts claiming that over the last four years, the number of primary customers, those doing the majority of their grocery shopping at Sainsbury’s, has increased by 18%.
Known for being the most competitive in the world, Sainsbury’s has positioned itself well in order to grow its share of the U.K. grocery market.
This story was originally featured on Fortune.com
