Sainsbury's has reported strong half year financial results, with share gains increasing by over a quarter (26%) over the course of the year.

The supermarket retailer, which has a 15% share of Britain’s grocery market, trailing Tesco, has reported a 10% increase in grocery sales year-on-year, alongside a retail operating profit of £485m up 2% compared to H1 2022, reflecting strong volume-driven grocery profit growth.

Following the strong results, Sainsbury’s said it expects its underlying profit before tax at the end of the financial year to reach between £670m-700m, which is in the “upper half” of its earlier guidance, with retail free cash flow of at least £600m, £100m higher than predicted.

Clothing and fuel sales dropped by 8.4% and 19.6%, respectively. The drop in clothing sales was a reflection of what the supermarket calls a “disciplined trading approach in a seasonally weak and promotionally-driven market”, with fuel sales dropping as a result of lower input prices.

Chief executive officer at J Sainsbury plc, Simon Roberts, said: “Food is firmly back at the heart of Sainsbury's. We've never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us.

“We know people are still finding things tough and we're working harder than ever to reduce our costs, putting the money back into our customers' pockets through lower prices on the products they buy most often. I'm pleased to say food inflation is coming down and we are passing savings on to customers. We've rolled out Nectar Prices to over 6,000 products and the vast majority of customers are now shopping with Nectar, saving over £450m since April.”

Sainsbury's is now price matching Aldi on key items and it has said in its half year report that it is providing better prices to members of its Nectar loyalty scheme.

Following the release of the results earlier today, shares in the company jumped by as much as 5%, Reuters has reported.

Manager of the quality shares portfolio at Wealth Club, Charlie Huggins, added: “Sainsbury's has worked hard to lower prices in the face of intense competition. The launch of Nectar prices, where Nectar card holders save money on everyday items seems to have been well received and has helped the group to hold its own against Tesco and the German discounters.

“Food inflation is starting to fall and this should help ease pressure on consumers, whose finances have been squeezed from all angles by rising prices, no more so than for the weekly shop. That said, lower inflation also means volume growth will become a more important contributor to like-for-like sales in future periods. It is encouraging that Sainsbury's volumes grew in the second quarter but it will need to maintain this momentum.

“Sainsbury's cannot afford to rest on its laurels. The supermarket sector remains intensely competitive and the UK consumer is far from being out of the woods. But the group is holding its own and will go into the important christmas period with a measure of confidence.”

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