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Investing.com — Shares in J Sainsbury PLC (LON:SBRY) rose in early trading on Tuesday, after the U.K. supermarket chain backed its full-year profit guidance despite concerns over inflation pressures.
Like-for-like quarterly sales, excluding fuel, fell by 4% compared to the previous year, when demand was boosted by COVID lockdown measures. Against pre-pandemic levels, the figure was 5.4% higher.
When accounting for fuel, total retail sales also increased by 2.5%, suggesting the impact of a recent significant rise in petrol prices.
Grocery sales were lower by 2.4% but rose by almost 9% versus pre-COVID performance. General merchandising sales – which include both Sainsbury’s supermarkets and its Argos unit – dropped 11.2%, but were still in line with expectations.
Sainsbury also confirmed its full-year outlook, saying it expects annual underlying pre-tax profit of between £630M and £690M. However, the group’s chief executive, Simon Roberts, warned that soaring prices will weigh on customer spending throughout 2022.
“The pressure on household budgets will only intensify over the remainder of the year and I am very clear that doing the right thing for our customers and colleagues will remain at the very top of our agenda,” Roberts said in a statement.
Inflation in the U.K. touched a fresh 40-year high of 9.1% in May due to a marked surge food and energy prices. The Bank of England has said it expects that figure to continue to rise throughout the year, with inflation seen topping 11% in October.
The BoE has raised its benchmark interest rate by 25 basis points to combat “robust cost and price pressures,” and pledged to “act forcefully” in the future to tamp down soaring inflation. But concerns remain that these aggressive monetary policy decisions may potentially, in turn, lead to a broader economic slowdown.
