The boss of Sainsbury’s says it is taking market share from discounters Aldi and Lidl due to bumper grocery sales, helping the firm lift its annual profit guidance.
Simon Roberts updated analysts on its performance as the company, which also owns Argos, reported flat underlying profits of £340m for the six months to 16 September.
That was despite a 10.1% rise in grocery sales compared to the same period last year.
Sainsbury’s said it was achieved through volume growth, meaning its revenues were not only flattered by the effects of grocery inflation.
Mr Roberts said the chain had raised prices by half the rate of inflation and was cutting prices in areas where costs were coming down – mainly in fresh food.
The supermarket price war was a major reason for the flat profit performance due to its investment in prices.
On a comparable basis, group sales were 6.6% up – dented by weaker demand for clothing.
Sainsbury’s blamed dodgy summer weather.
It said it was looking ahead to Christmas with increased confidence, despite the continuing squeeze on shoppers from the evolving cost of living crisis.
The company said annual profits were now on course to be in the “upper half” of its previous guidance, at between £670m and £700m – at a similar level to 2022/23.
Mr Roberts said: “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.
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“I’m pleased to say food inflation is coming down and we are passing savings on to customers.”
Looking ahead to the all-important Christmas season, the group added: “strong trading momentum has continued in recent weeks and we are confident heading into the peak trading period.”
Shares rose by as much as 5% – building on gains of 19% over the year to date.
Charlie Huggins, portfolio manager at Wealth Club, said of the performance: “Sainsbury’s has worked hard to lower prices in the face of intense competition.
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“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. “
