Sainsbury’s has raised its full-year profit guidance after reporting higher sales and underlying operating profit in the first half, driven by continued grocery volume growth and cost savings.

The UK’s second-largest supermarket group said sales from continuing operations, excluding fuel, rose 2.6% to £14bn in the 28 weeks to 12 September. Underlying operating profit increased 3.6% to £525m, while grocery sales grew 2.9% to £13.2bn as customers responded to competitive pricing, lower inflation and improvements to its food ranges.

General merchandise and clothing sales fell 3.4% to £800m, reflecting reduced general merchandise space, a highly competitive market and subdued demand for clothing. Fuel sales increased 17.8% to £2.3bn, largely due to higher wholesale prices.

Sainsbury’s now expects underlying operating profit from continuing operations of between £1.025bn and £1.065bn for 2026/27, raising the lower end of its previous guidance after adjusting for the planned sale of Argos. It also reiterated its expectation of generating more than £500m in free cash flow for the full year.

The group reported a statutory loss after tax of £164m, compared with a profit of £155m a year earlier, primarily reflecting discontinued operations associated with Argos. It also announced an interim dividend of 4.1p per share and said it had completed £200m of a previously announced £300m share buyback.

Sainsbury’s is progressing the sale of Argos to Swift Partners, agreed in July, as it sharpens its focus on food retailing. The transaction is expected to complete by the end of February 2027, with full separation planned by February 2029.

Chief executive Simon Roberts said: “We know many households are finding things tough at the moment and we’re making it easier for customers to enjoy good food every day, whatever their budget. That’s why more people are choosing us for their weekly shop, driving continued volume growth in the first half.

“As we progress the sale of Argos and further sharpen our focus on food, we are building a simpler, more focused Sainsbury's."

Sainsbury's shares fell around 3% in early Thursday trading.

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