Sainsbury's Raises Profit Guidance as Grocery Sales Rise 5.3%

The Tip Desk · June 2, 2026 · 2 min read

The UK's second largest grocer expects total cash returns to shareholders in financial year 2025/26 to exceed £800 million.

J Sainsbury plc, the UK's second largest grocer, has strengthened its profit guidance following a period of grocery volume growth that the company said has exceeded the market for five consecutive years. For the 28 weeks ended 13 September 2025, sales excluding fuel rose 5.2%, driven by a 5.3% increase in grocery sales and a 3.3% rise in general merchandise and clothing sales.

Retail underlying operating profit reached £504 million, a figure the company stated was ahead of expectations and in line with the previous year. This performance was supported by cost savings and strong trading, which the company said offset regulatory costs, higher employment expenses, and disruption caused by space reallocation. Statutory profit after tax was £165 million, compared to £76 million in the same period of the prior year.

Management attributed the growth to investments in value and quality, specifically the Aldi Price Match on essentials and personalized Nectar Prices. The company said Nectar Prices saved customers an average of £14 on weekly shops of £80 or more. Additionally, the company reported that its Taste the Difference range drove the largest premium own-label share gains in the market.

Other segments showed mixed results. Argos sales rose 2.3%, with the company reporting improved profitability and a customer base of 19.6 million active users. Convenience store sales grew 3%, which the company attributed to invested stores and new space. Conversely, fuel sales fell 11.3%.

Capital returns have increased following the disposal of the company's bank. Proceeds from the bank disposal are now expected to exceed £400 million. The company returned £300 million of these proceeds to shareholders during the 2025/26 year via a £250 million special dividend and a £50 million incremental share buyback.

For the 2026/27 financial year, the company will buy back £300 million of shares, consisting of a £200 million core buyback and £100 million from net bank disposal proceeds. The proposed full-year dividend is 13.7 pence per share, a 0.7% increase from 13.6 pence in 2024/25.

Retail free cash flow stood at £310 million, and the company expects this to exceed £500 million for the full year. The company is currently integrating Groceries Online, Chop Chop, and SmartShop into a single app to enable AI-led experiences and further personalization.