Sainsbury's has recorded a 3.1% annual increase in retail sales to £31.6bn, which was described by one analyst as a "sweet set of full-year results".

In the year to 1 March, the supermarket’s profit before tax jumped by 8.6% to £761m, while its operating profit increased by 7.2% to £1.04bn.

However, this operating profit growth was offset by lower profits at Argos, which saw sales drop by 2.7% year-on-year to £4.9bn.

Sainsbury's completed a £200m buyback scheme in the year, with its full-year dividend increasing by 4% year-on-year to 13.6 pence.

Chief executive at Sainsbury's, Simon Roberts, said: "We've transformed our business over the past four years. We have created a winning combination of value, quality and service that customers love, investing £1bn in lowering our prices.

"More people are choosing Sainsbury's for their main grocery shop as a result, delivering our highest market share gains in more than a decade. We are committed, above all else, to sustaining the strong competitive position we have built - consistently giving customers the great value they have come to expect from Sainsbury's - and we expect to continue to outperform the market."

In its outlook, the supermarket said its investment over the past four years had put it in a "strong competitive position" and that it is committed to sustaining this in the year ahead.

Sainsbury's said it would deliver a retail underlying operating profit of around £1bn and a free cash flow of more than £500m in the 2025/26 financial year.

It added that its profit delivery will be "supported by continued growth in Nectar profit contribution" and cost saving delivery, which will be weighted towards the second half of the year.

Sainsbury’s is also set to buy back at least £200m in shares in the current financial year and expects to return bank disposal proceeds of £250m via a special dividend in H2.

Equity analyst at Hargreaves Lansdown, Aarin Chiekrie, added: "Sainsbury’s delivered a sweet set of full-year results, with both revenue and profits moving higher. The group has transformed itself in recent years. Things like Aldi price match and Nectar prices have been expanded across more products than ever before and are doing a great job at keeping customers loyal.

"Looking ahead, guidance looks quite conservative at around 8% below market expectations, pointing to broadly flat revenue and profit this year. That echoes conservative guidance from Tesco last week, and gives Sainsbury's plenty of wiggle room to get its hands dirty if competition with the likes of Asda and Tesco heats up. But shy of an all-out price war, there could be room for positive surprises as the year progresses."

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