Sainsbury’s expects to ring up profit rise

J SAINSBURY is this week expected to say its pre-tax profits grew 15 per cent to £595m, but analysts believe it will avoid giving an update on sales amid tough conditions.

Sainsbury’s, the third-largest supermarket chain in the UK by market share, is tipped to hand staff a bonus pool of £70m following a buoyant year to the end of March. Like-for-like sales were up 4.3 per cent excluding fuel over the 12 months. Sales expansion slowed to 1.7 per cent in the final 11 weeks of the year.

Analysts agree there will be notable bottom-line growth, but all eyes will be on chief executive Justin King’s outlook given the fierce competitiveness of the retail sector. Grocers have struggled to keep up sales growth as slowing food inflation has taken its toll. Last week, Yorkshire-based rival Wm Morrison said sales growth slowed sharply in the three months to the start of May to 0.8 per cent.

Seymour Pierce retail analyst Freddie George expected Sainsbury’s profits to come in above consensus at £625m. However, he warned that rising fuel costs would eat into families’ budgets while the food vending market would remain intensely crowded.

“The upshot is that it will be more difficult to grow sales and the margin gains over the past three years are unlikely to be repeated,” he added.

Deutsche Bank said a trading update to coincide with the supermarket’s full-year numbers on Thursday was unlikely.