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J Sainsbury PLC said it swung to profit on Thursday, but the grocer warned of a weaker bottom line going forward due to accelerating inflation and costing of living pressures impacting disposable income.
The London-based supermarket chain swung to a pretax profit of £854 million in the year ended March 5. The previous year, Sainsbury's posted a pretax loss of £164 million.
The grocer reported underlying pretax profit of £730 million, more than doubled from £357 million in financial 2021 and up 25% from £586 million in financial 2020.
The underlying profit figure topped company-compiled consensus of £727 million, as well as the company's own guidance of £720 million. This was driven by continued elevated sales, lower Covid-19 costs and falling finance costs, it explained.
Sales, excluding VAT, were 2.9% higher at £29.90 billion from £29.05 billion. Retail sales, also excluding VAT, rose 3.0% against the previous year to £29.46 billion from £28.62 billion.
The chain recommended a final dividend of 9.9 pence per share. This will result in an increased full-year dividend of 13.1p, up 24% from 10.6p in financial 2021.
Sainsbury's expects underlying pretax profit to fall as much as 14% in the new financial year. It forecasts underlying pretax profit between £630 million and £690 million.
The company said: ‘The year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers' disposable incomes.’
Shares in Sainsbury's were down 3.0% at 231.80 pence on Thursday morning in London.
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