Britain's Sainsbury's warns of lower profit as inflation hits

The group made underlying profit before tax of 730 million pounds in the year to March 5, 2022 while analysts on average had been expecting 703 million pounds for 2022-23. "The year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers' disposable incomes," said Chief Executive Simon Roberts.

British supermarket group Sainsbury's followed market leader Tesco in warning of lower profit for the current year due to soaring inflation, taking the shine off a more than doubling in profit for its 2021-22 year.

Sainsbury's said on Thursday its underlying profit before tax in 2022-23 was expected to be between 630 million pounds and 690 million pounds ($789-$864 million). The group made underlying profit before tax of 730 million pounds in the year to March 5, 2022 while analysts on average had been expecting 703 million pounds for 2022-23.

"The year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers' disposable incomes," said Chief Executive Simon Roberts. Already this month, Tesco, No. 4 player Morrisons and No. 7 the Co-operative Group have all warned on the outlook as a cost of living crisis and supply disruption due to the war in Ukraine weigh on the grocery sector.

Surging prices are causing the biggest squeeze on UK household incomes since at least the 1950s and consumer confidence is at near record lows. Analysts see Sainsbury's as more challenged than other supermarket groups because of its ownership of the Argos general merchandise business - a sub-sector more exposed to pressure on consumers' disposable income.

Sainsbury's revenue rose 2.9% to 29.9 billion pounds in 2021-22. Like-for-like sales, excluding fuel, fell 2.3%. They fell 5.6% in the fourth quarter, having fallen 4.5% in the third quarter. ($1 = 0.7988 pounds)