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J Sainsbury PLC on Thursday reported its half-year profit dropped, despite revenue growth, amid ongoing grocery inflation.
Pretax profit in the 28 weeks to September 17 fell by 30% to £376 million from £527 million, the London-based grocer said, blaming high inflation.
September fresh food prices were 12% higher than in September 2021, according to British Retail Consortium-Nielsen Shop Price Index data. In October, they rose to 13% higher than a year ago, data from the index showed on Wednesday.
Food inflation in general was at 11% in September and 12% in October.
"Grocery inflation in the market increased during the period, but we continued to prioritise value for customers, inflating behind all key competitors," Sainsbury's said. It added that it will have invested more than £500 million by March 2023 in keeping prices lower via cost-cutting measures.
Revenue grew 4.4% year-on-year to £16.41 billion from £15.72 billion.
It said grocery sales grew 0.2% in its first half overall, and by 3.8% in the second quarter as tough lockdown comparatives eased. General merchandise decreased by 6.1% to £2.9 billion from £3.1 billion a year prior.
Meanwhile, fuel sales grew 40% to £3.4 billion from £2.4 billion. Retail excluding fuel fell by 1.3% to £14.7 billion from £14.9 billion.
Sainsbury's will pay an interim dividend of 3.9 pence per share, up 22% from 3.2p a year before, and backed its annual underlying pretax profit guidance of £630 million to £690 million.
It expects annual retail free cash flow generation of "at least £500 million".
"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. We are half way through a £1.3 billion cost saving programme that has doubled the run rate of previous years and we are confident in our competitive position in the face of macro challenges and operating cost inflation," Sainsbury's said.
The company said that trading momentum stayed strong in the first weeks of the second half, with continued volume market share gains.
Over the four weeks ending October 2, The market share of Sainsbury fell to 14.7% from 14.9% a year before, survey figures from data analytics firm Kantar showed on October 11.
Sainsbury's shares were 3.9% higher at 205.52 pence each in London on Thursday morning.
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