The company said it is having to cut prices and launch early sales to keep tills ringing, in an update before the end of its trading year on 17 September.
AB Foods, which also owns Twinings, Ovaltine and Kingsmill, said the budget retailer’s like-for-like sales rose by three per cent but that operating margins had been hit.
It said second half operating profits across the company will be in line with its expectations with annual adjusted earnings seen flat.
Full year results at the company, whose chief executive is George Weston, will be released on 8 November. Sugar and agriculture revenues are ahead of the previous year.
AB Foods said in a statement: “As previously indicated, adjusted earnings for the full year are expected to be similar to last year’s very strong results which benefited from 53 weeks trading.”
Grocery revenues and profit for the full year are expected to be ahead of last year.
Shares in AB Foods closed 1.7 per cent down at £10.52.