Sainsbury’s braces for price war squeeze as it forecasts flat profits
Sainsbury’s has forecast flat profits for the year ahead as it looks to maintain momentum in a highly competitive market
Sainsbury’s has forecast flat profits for the year ahead as it looks to maintain momentum in a highly competitive market, despite reporting a solid 7.2% increase in annual profit.
The UK’s second-largest supermarket said it expects retail underlying operating profit for 2025/26 to come in at “around” £1bn — slightly down from the £1.036bn it delivered in the year to March 1 and below analysts’ expectations of £1.08bn.
The cautious outlook follows a period of heavy investment across loyalty, value pricing, and retail media, which Sainsbury’s credits with driving customer growth and improving value perception.
The group said it would continue to prioritise volume growth and customer loyalty over short-term margin gains.
“We’re in a strong competitive position and are committed to holding that in 2025,” it said, adding that it had “started the year with good trading momentum across all our brands.”
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The retailer has grown its Nectar Prices scheme to cover more than 9,000 products, with over 85% of customers now shopping with a Nectar card.
Sainsbury’s said it delivered £2bn in savings through the scheme this year, while also expanding its digital and in-store retail media offer through Nectar360.
Argos, Sainsbury’s general merchandise arm, returned to sales growth in the final quarter after a tough first half. The retailer is focusing on simplifying its offer, boosting digital engagement, and extending supplier-direct fulfilment to improve range and availability.
Sainsbury’s reiterated plans to deliver £1bn cost savings by March 2027 and will continue investing in technology, automation, and digital innovation — including rolling out 1,600 more in-store digital advertising screens and trialling SmartShop handset payments.
The group also confirmed that proceeds from the sale of its banking assets would be partly returned to shareholders via a £250m special dividend in the second half of the year, subject to regulatory approval.
At the start of the year Sainsbury’s announced plans to cut over 3,000 jobs and close its in-store cafés and hot food counters, part of a £1bn cost-saving plan aimed at offsetting steep tax and labour cost rises.
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