Sainsbury’s raises lower end of profit outlook to £1.025 billion despite £164 million loss
Key Facts
J Sainsbury reported a statutory loss after tax of £164 million for the 28 weeks ended 12 September 2026, after recording a profit of £155 million in the same period a year earlier. The company said in its interim results that the loss was mainly related to discontinued operations, after Argos was classified as such following an agreement to sell it to Swift Partners. By contrast, underlying operating profit from continuing operations rose 3.6% to £525 million, from £507 million a year earlier. Sainsbury attributed the improvement to sales volume growth and cost savings. It also raised the lower end of its annual underlying operating profit forecast for continuing operations, indicating that performance in the continuing business was stronger than it had previously expected.
The company set its underlying operating profit forecast for fiscal 2026/27 at between £1.025 billion and £1.065 billion, raising the lower end while keeping the upper end unchanged. The previous guidance range, excluding Argos’s contribution to make the comparison on a continuing-operations basis, was equivalent to £965 million to £1.065 billion. The lower-end revision reflects an improved outlook for the business the company will continue to operate after exiting Argos. This comparable basis matters when reading the figures, because the Argos sale changes the scope of operations included in the results and guidance. Sainsbury says its focus on grocery is supported by sales volume growth, while cost savings remain one source of underlying profit growth.
Like-for-like sales growth excluding fuel slowed to 1.2% in the second quarter of 2026/27, compared with 2.3% in the first quarter and 5.1% in the second quarter of the previous fiscal year. The sequence shows a slowdown in the current year, alongside a growth rate clearly below the comparable period. This places Sainsbury’s performance in a market the company says will remain highly competitive in the second half. The company said it would balance its decisions to protect the value and quality of its offer, product availability and service. The slowdown coincides with the increase to the lower end of its annual profit forecast, highlighting the difference between the path of underlying profitability and like-for-like sales momentum in the latest quarter.
Chief Executive Simon Roberts attributed some of the pressure on household discretionary spending to the impact of the Middle East conflict on energy prices in the first half. He said the impact of the conflict and energy prices “reduced household discretionary spending during the first half of this year.” This factor adds context to the slowdown in like-for-like sales growth, while the company also stressed that volume growth and cost savings supported underlying operating profit. On capital allocation, Sainsbury completed a £200 million share buyback from a previously announced £300 million programme. A further £100 million remains to complete the programme in the second half of the fiscal year.
Free cash flow was £333 million in the first half, and the company said it remained on track to deliver more than £500 million for the full fiscal year. It proposed an interim dividend of 4.1 pence per share, equivalent to 30% of the dividend per share for the previous fiscal year. For Argos, Sainsbury expects to complete the sale to Swift Partners by the end of February 2027, with the full separation due by February 2029. The deal is central to the company’s transition to a structure focused on its continuing business and is also linked to the discontinued-operations losses reported in the results. The company will issue its third-quarter trading statement on 8 January 2027, followed by its preliminary results for fiscal 2026/27 on 22 April 2027.