Sainsbury’s says full-year profits to be at upper end of forecast range

J Sainsbury on Wednesday said full-year profits would be near the upper end of its forecast range after reporting robust Christmas sales.

The retailer said grocery sales were 7.1 per cent higher than last year over the Christmas period — the six weeks up to January 7. Across the third quarter as a whole, same-store sales were up 5.9 per cent.

Much of this increase was down to higher prices. But the UK’s second-largest supermarket said volumes had been “relatively resilient”.

As a result, full-year profit would be at the top end of the company’s forecast £630mn-£690mn range, despite the recent announcement of another pay rise for hourly paid staff, the group said. Retail free cash flow was also likely to be £100mn higher than previously forecast, at about £600mn.

There was a marked improvement in general merchandise sales, which rose 4.6 per cent year on year against a 16 per cent decline in the same quarter last year.

Chief executive Simon Roberts said that despite the strong performance, Sainsbury’s understood money would be “exceptionally tight this year”, particularly as many people waited for Christmas bills to land. He pledged to work with suppliers to keep prices down.