Annual profits at the UK’s second biggest supermarket, Sainsbury’s, have reached £1bn.
The supermarket chain reported that sales and profits grew over the year to March.
It also comes after Sainsbury’s announced in January plans to close of all of its in-store cafes and the loss of 3,000 jobs.
But the high profits are not expected to increase, according to Sainsbury’s, which warned of heightened competition as a supermarket price war heats up.
Tesco too warned of “intensification of competition” last week, as Asda’s executive chairman earlier this year committed to foregoing profits in favour of price cuts.
Sainsbury’s said it had spent £1bn lowering prices, leading to a “record-breaking year in grocery”, its highest market share gain in more than a decade, as more people chose Sainsbury’s for their main shop.
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It’s the second most popular supermarket with market share of ahead of Asda but below Tesco, according to latest industry figures from market research company Kantar.
In the same year, the supermarket announced plans to cut more than 3,000 jobs and the closure of its remaining 61 in-store cafes as well as hot food, patisserie, and pizza counters, to save money in a “challenging cost environment”.
This financial year, profits are forecast to be around £1bn again, in line with the £1.036bn in retail underlying operating profit announced today for the year ended in March.
The grocer has been a vocal critic of the government’s increase in employer national insurance contributions and said in January it would incur an additional £140m as a result of the hike.
Higher national insurance bills are not captured by the annual results published on Thursday, as they only took effect in April, outside of the 2024 to 2025 financial year.
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Supermarkets gearing up for a price war and not bulking profits further could be good news for prices of shelves, according to online investment planner AJ Bell’s investment director Russ Mould.
“The main winners in a price war would ultimately be shoppers”, he said.
“Like Tesco, Sainsbury’s wants to equip itself to protect its competitive position, hence its guidance for flat profit in the coming year as it looks to offer customers value for money.”
There has been, however, a warning from Sainsbury’s that higher national insurance contributions will bring costs up for consumers.
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News shops are planned in “key target locations”, Sainsbury’s results said, which, along with further openings, “provides a unique opportunity to drive further market share gains”.
