Sainsbury’s expects a pretty challenging
festive period while households face tight budgets, even as the retailer lifted its annual profit outlook to at least £1.025 billion. The supermarket reported sales from continuing operations, excluding fuel, were up 2.6% for the half-year ending 12 September 2026, as shoppers curtailed spending on general merchandise and clothing.
Sainsbury Raises Annual Profit Outlook
Sainsbury’s now expects an annual underlying profit of between £1.025 billion and £1.065 billion, a slight increase from its previous guidance. Fuel sales surged 17.8 per cent as the Iran war drove up global oil prices. Total revenue for the period reached £16.2 billion, a 4.1% increase compared to the previous year. This upward revision follows a 3.6% rise in underlying operating profit to £525 million for the 28 weeks to 12 September 2026.
Grocery sales climbed 2.9% to £13.2 billion, supported by a 9% rise in online grocery orders—with on-demand sales up 27%—and a 6% increase in the premium Taste the Difference
range, while over 200 Discovery products are expected by the year end.
Argos Sale Follows Clothing Slump
Sales in general merchandise and clothing fell by 3.4% to £0.8 billion, a decline the retailer attributed to a subdued clothing market
and a reduction in selling space. Specifically, sales at the Argos catalogue shop were down 1.8%, while the Tu clothing brand saw a 2% decrease.
Roughly ten years after purchasing the brand for £1.4 billion, Sainsbury’s reached an agreement in July to sell Argos to Swift Partners—a company formed by experienced retailers including Richard Pennycook, the former chief executive of the Co-operative Group—for at least £120 million. The group reported a pre-tax loss of £63m for the half-year—widened from £14m a year earlier—while the deal is expected to complete in February and the businesses to be totally separated by 2029.
Simon Roberts on Budget Pressures
It is really important we don’t see a repeat from previous budgets.
Simon Roberts, CEO of Sainsbury’s
Loyalty Schemes Drive Market Strategy
According to Charles Allen, a senior retail analyst at Bloomberg Intelligence, the latest data implies that the supermarket does not anticipate boosting its profits during the second half of the year because competitors are focusing primarily on sales growth. Nectar Prices are applied to around 11,000 products with over 22 million members benefiting, while Sainsbury’s maintains its Aldi Price Match initiative to protect market share.
The retailer reports that 350 million personalized offers have been sent via Your Nectar Prices and used by 17% more customers, with shoppers having saved £250m since the scheme’s launch in 2021. Speculation regarding potential mergers continues to circulate following Financial Times reports that the groups are no longer in talks, after efforts to merge with Asda collapsed in 2019 and following reports that Sainsbury’s had entered, and ended, talks to buy Morrisons earlier this year.
Can Sainsbury’s achieve its projected annual profit of at least £1.025 billion while general merchandise sales fall and households face mounting festive budget pressures?