J Sainsbury plc

For the 28 weeks to 13 September, Sainsbury’s sales grew 5.2% and Argos sales grew 2.3%; total retail sales rose 4.8% excluding fuel and 2.7% including fuel. Retail underlying operating profit was GBP 504 million, broadly in line with last year and ahead of expectations; total underlying operating profit increased 7%, and underlying EPS increased 12%. Non-underlying costs were GBP 95 million, including GBP 58 million of retail restructuring costs. Full-year guidance was raised to retail underlying operating profit of more than GBP 1 billion, retail free cash flow of at least GBP 500 million, capital expenditure of GBP 800 million to GBP 850 million, and more than GBP 800 million returned to shareholders this year. Management also said net proceeds from financial services disposals are now expected to be more than GBP 400 million, with GBP 400 million to be returned to shareholders, and Financial Services underlying profit is now expected to be broadly breakeven this year; they still expect at least GBP 40 million of underlying operating profit contribution from Financial Services products by March 2028.

Simon Roberts said the first half was built around a deliberate priority to protect Sainsbury’s competitive position while investing in value, quality and service. He highlighted Aldi Price Match expansion, Nectar / Your Nectar personalization, more than 600 summer product launches, and strong fresh food availability as drivers of volume growth and market share gains. His tone was confident but cautious: he said the company is entering Christmas with momentum, but is keeping room to make “balanced choices” in a competitive, cost-pressured market.

Blathnaid Bergin emphasized that the company is not expecting to move forward on profit leverage again this year because of higher National Insurance and EPR costs, despite continued volume growth ahead of the market. She cited retail underlying operating profit of GBP 504 million, retail free cash flow of GBP 310 million in H1, cash restructuring costs of around GBP 55 million, expected retail restructuring cash costs of around GBP 100 million for the full year, and capital expenditure guidance of GBP 800 million to GBP 850 million. She also detailed shareholder returns: a GBP 250 million special dividend, a GBP 250 million buyback for the year, an added GBP 100 million to next year’s core buyback, and more than GBP 800 million total returns this year.

Analysts focused on Christmas demand, food inflation, H1/H2 profit phasing, Argos, the JD.com process, retail media, business rates, and next year’s buyback level. Management said consumers are focused on value and that Christmas plans lean on value, Taste the Difference trade-up, and strong service; on inflation, Simon said the industry has largely absorbed this year’s higher costs but more pressure remains from wage and regulatory items. On Argos, he said discussions with JD.com were halted because of the need to protect shareholder interests, but the process showed Argos is separable and gave the team useful learnings. On buybacks, Blathnaid said GBP 300 million of dividends plus the buyback base is a reasonable working assumption for next year, and segmental reporting changes are under review as Financial Services exits.