Sainsbury’s reported an underlying operating profit of about £1.03bn for the year to 28 February — but told investors the Middle East conflict may “impact both our customers and our business” and could weigh on profits in the year ahead. The FTSE 100 retailer gave guidance of £975m–£1.075bn, while group revenue, excluding VAT, rose to roughly £33.6bn and grocery sales grew about 5.2%.

Results in numbers - Underlying operating profit for the year to 28 February: £1.025bn (about £1.03bn). Forward guidance for the current year: £975m–£1.075bn. - Group revenue (excluding VAT): approximately £33.6bn, up 2.7%. - Retail sales excluding fuel: +4.3% year-on-year; grocery sales: +5.2%, helped by stronger volumes. - Argos sales: up 0.7% to about £4.1bn, though the business faces a subdued market. Where the pressure comes from - Management said the conflict, which began in late February, has changed customer behaviour, with shoppers more focused on cost and value. - The company flagged substantial operating cost inflation in grocery. Rather than passing all cost increases straight to customers, Sainsbury’s said it has invested to protect competitiveness and refresh stores. - Supermarket leaders have lobbied the government for targeted energy support to reduce pressure on food prices. Market reaction and strategic choices - Shares opened lower on the day the warning was published, reflecting investor concern over near-term margins. - Sainsbury’s strategy is a mix of price investment and cost control: the company says it will balance passing on costs with investments to maintain market position. - The group has a dedicated Argos management team to accelerate recovery after a challenging year and paused earlier sale talks. Sector backdrop - The retailer framed its outlook against a grocery market facing input-cost inflation and uncertain consumer behaviour tied to geopolitical developments. - Management described the duration and extent of the conflict’s impacts as very uncertain, underlining the need to balance price, investment and cost pressures.

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"The conflict in the Middle East will impact both our customers and our business. The duration and extent of these impacts is very uncertain," said Simon Roberts, chief executive of Sainsbury’s.

This article was created with AI assistance.