J Sainsbury plc has warned that the conflict in the Middle East will “impact both our customers and our business”, raising the prospect of lower profits this year as geopolitical pressure feeds through into household budgets and supply chains.
The UK’s second-largest grocer echoed caution from rival Tesco plc, saying shoppers have become “even more focused on the cost of living” since the war began at the end of February.
Chief executive Simon Roberts said the retailer remained committed to delivering “the best possible value,” but acknowledged that the duration and scale of the conflict’s impact remained “very uncertain”.
Sainsbury’s said it expects underlying operating profits for the current financial year to come in between £975 million and £1.075 billion, signalling potential pressure ahead despite a broadly resilient trading performance.
The warning came as the group reported underlying operating profit of £1.025 billion for the year to February 28, a 1.1% decline on the previous year, while pre-tax profits rose sharply by 55.3% to £393 million, reflecting one-off factors.
Group revenues, excluding VAT, increased by 2.7% to £33.6 billion, supported by strong grocery performance. Retail sales excluding fuel rose 4.3%, driven by a 5.2% increase in food sales, with volumes growing.
Its Argos arm posted more modest growth, with sales up 0.7% to £4.1 billion over the year.
The update highlights the increasingly complex picture facing UK retailers: solid underlying demand, but growing pressure from external shocks, higher input costs and persistent strain on consumer confidence.
Analysts said supermarkets remain relatively defensive, but warned that sustained geopolitical disruption could still feed through into higher prices and margin pressure later in the year.
Roberts said: “More and more customers are choosing Sainsbury’s for more of their shopping, trusting us to deliver great value day in, day out.
“The conflict in the Middle East means customers are even more focused on the cost of living and we are absolutely committed to making sure everyone gets the best possible value when they shop with us.”
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