Sainsbury's, Britain's second-biggest supermarket group, has kept its financial guidance for this year despite reporting a 8% fall in first-half profit, saying it was well placed for the Christmas trading period.
The group, which has a 14.7% share of Britain's grocery market, said it still expected 2022-23 underlying pre-tax profit of between £630 million and £690 million ($718-$786 million), down from the £730 million made in 2021-22.
Prior to Thursday's update analysts were on average forecasting £637 million.
Sainsbury's shares rose 2.5% in early trading.
Cost Of Living Crisis
As a cost of living crisis worsens, consumers have cut their spending.
With inflation at a 40-year high of 10.1%, and food inflation at 14.5%, consumer confidence is close to the gloomiest on record.
However, Sainsbury's said trading momentum had been strong in the first few weeks of its second half and it had made market share gains on a volume basis.
It said that reflected the investment it made in its offer, with customer perception of its value and quality improving.
"We are well-placed through the peak trading period and into next financial year to support customers as they manage further cost of living pressures," it said.
"We are confident in our competitive position in the face of macro challenges and operating cost inflation."
It also noted it was half way through a £1.3 billion cost saving programme.
Sainsbury's reported underlying pre-tax profit of £340 million for the 28 weeks to 17 September.
Underlying Pre-Tax Profit
Second-quarter like-for-like sales, excluding fuel, rose 3.7%, following a 4% fall in the first quarter.
Market leader Tesco lowered its profit expectations last month, while in September, Morrisons, the Co-operative and Aldi UK all reported profit falls.
Analysts see Sainsbury's, whose shares have fallen more than 20% this year, as more challenged than other supermarket groups because it owns the Argos general merchandise business - an area more exposed to pressure on consumers' disposable income.
News by Reuters, edited by Donna Ahern, Checkout. For more retail stories, click here. Click subscribe to sign up for the Checkout print edition.