The retailer reported a 3.9% increase in like-for-like sales, excluding petrol, for the year to 22 March, a 28.4% increase in underlying profit before tax to £488m and sales up 5.8% to £19.3bn.
However, analysts were unimpressed: “Profits are still lower than those achieved in 1991, operating cash flow has been weak and we believe the industry environment is about to get a lot tougher,” said Philip Dorgan, an analyst at Panmure Gordon.
Sainsbury's CEO Justin King also challenged figures released by the Office for National Statistics this week which put food inflation at 6.6%. He put the figure closer to 2%.
“Real inflation, and therefore the real challenge, in household budgets is perhaps less than is being reported,” he said. “We will talk ourselves into a bad period if we convince ourselves it is bad and worse than it is.”
“Are consumers less confident? Yes. Are household budgets more stretched? Yes. But we are miles away from anything that could be called a recession,” he added.