Sainsbury’s became the latest grocer to vow to keep prices low as it upgraded its profit forecasts on the back of bumper Christmas sales.
On an upbeat day for the British retailers, the country’s second biggest supermarket said it now expects profits ‘of at least £720million’ for the financial year to March 31.
That is 9 per cent higher than its previous forecast of £660million, and more than double the £356million it made last year. The supermarket cashed in as families celebrated Christmas with luxuries.
Sainsbury’s said it expects profits ‘of at least £720m’ for the financial year to March 31 – 9% higher than its previous forecast of £660m
It sold a record 21.5m bottles of champagne and other sparkling wine in the six weeks to January 8.
Shares jumped 3.1 per cent, or 8.7p, to 288p. But chief executive Simon Roberts said this year will be ‘tough’ as the country faces a cost of living crisis.
He vowed to make low prices a ‘key priority’ and doubled down on its promise to match German discounter Aldi on 150 core products.
It comes as the Bank of England expects inflation to hit 6 per cent by spring while analysts have warned that the energy bill price cap could jump by more than £700 in April.
National insurance rates will also rise in April, costing taxpayers an extra £12billion.
And the average shop is becoming more expensive, with grocery prices 3.5 per cent higher in December than a year earlier.
Aldi and Lidl this week pledged to remain the lowest priced grocers in the UK, setting the scene for a price war.
Pressure is mounting on others including Tesco, which is due to publish a trading update today.
Retail analyst Richard Hyman, at consultancy TPC, said: ‘Because price inflation is going to outstrip wage inflation and there are going to be price rises, the good news for consumers is that competition is so intense it will not be that easy to put prices up.
Aldi and Lidl will make sure everyone is kept on their toes.’ Sainsbury’s, which has 1,411 stores and 189,000 staff, said its promise of a Christmas dinner as cheap as Aldi’s poached shoppers from rivals.
Grocery sales in the six weeks to January 8 were 0.8 per cent higher than Christmas 2020 when sales were buoyed by lockdowns. They were up 6.8 per cent on pre-pandemic levels.
Roberts said it had its ‘biggest ever new year’. It expects to report at least £720million in profit for the year ending in March, £60million more than forecast.
UBS analysts expect the grocer, which accounts for 15.4 per cent of the market, to have sold £29billion of food and other goods in the year.
US boost for JD Sports
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JD Sports upgraded its profit forecast after a £100million windfall from US customers spending their coronavirus stimulus cash.
It has 1,220 stores in the US and during the pandemic Presidents Trump and Biden gave everyone three stimulus payments, worth as much as £1,022.
For those in jobs, this was disposable income, and JD said this amounted to as much as £100million in profits in the first half.
With Black Friday and Christmas sales also strong in both the US and UK, it now expects profits of £875million for the 12 months to January 29.
Shares fell 3.3 per cent, or 7.3p, to 211.5p after it warned of price rises as inflation stalks the economy