UK-based J Sainsbury PLC (GB:SBRY), or Sainsbury’s, maintained its full-year forecast of 10% growth in profits after achieving a 3.7% jump in H1 retail underlying operating profit of £503 million. The first-half profits were mainly driven by 5% sales growth in Grocery, which offset the decline of 1.5% in its General Merchandise & Clothing sales.
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Sainsbury’s is a well-known supermarket chain in the UK with brands like Argos, Nectar, Habitat, and Tu.
Why is Sainsbury’s Stock Falling Today?
Despite the profit growth, SBRY stock fell 1.34% as of writing. This was an aftereffect of the company’s warning of inflationary pressures due to the government’s recent changes to national insurance in last week’s budget. This is expected to increase the company’s tax bill by £140 million next year.
The company further stated that in an industry with a 3% margin, there’s simply no capacity to absorb this level of unexpected cost inflation.
Sainsbury’s Announces Dividend and Maintains 2024 Outlook
For the first half, Sainsbury’s announced an interim dividend of 3.9p per share, similar to last year’s. Additionally, the company is on track to complete its share buyback of £200 million in the second half of this Fiscal Year.
In terms of its outlook, Sainsbury’s projects its Retail underlying operating profit to fall between £1.01 billion and £1.06 billion in FY24/25. This represents a growth of 5-10% as compared to FY23/24. The company also expects to generate a minimum of £500 million in free cash flow from its Retail segment.
Is Sainsbury’s a Good Share to Buy?
On TipRanks, SBRY stock has been assigned a Moderate Buy rating based on five Buys, one Hold, and one Sell recommendation. The Sainsbury’s share price target of 329.57p is 25.41% above the current trading level.
