“We’re not expecting particularly strong progress in terms of profitability,” said Darren Shirley, analyst at Shore Capital. “Sainsbury has given a steer that trading performance has improved but it’s had to invest in order to drive that. We forecast profit before tax will be somewhere in the £70m region for the half year after exceptionals.”
Before exceptional costs, Shirley said Sainsbury was on target for profit before tax of £110m for the half year to October 8.
He forecast that full-year figures would come in at £254m, below analysts’ average consensus figure of £276m.
However, looking forward, the consensus from the major brokers is that Sainsbury is heading in the right direction, with profit of £347m predicted for the next financial year and £456m for the following term. Mike Dennis, analyst at Cheuvreux, said he expected gross margins to have improved considerably for this half, but he remained cautious about increasing costs.