The UK-based J Sainsbury PLC (GB:SBRY) lifted its annual earnings outlook as grocery sales thrived in the first half of the fiscal year 2024. The company projected that its underlying profit before tax will reach the upper end of its previously provided guidance range of between £670 million and £700 million. It also raised its forecast for free cash flow to be at least £600 million, up from its prior guidance of £500 million.
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J Sainsbury commonly known as Sainsbury, is among the leading supermarket chains in the UK. The company operates through its 1400 stores and has a strong online presence in the market.
Following the announcement, the share price surged by nearly 4%, contributing to a year-to-date increase of 25%.
First-Half Numbers Snapshot
During the first half, grocery sales saw a notable increase of 10.1%, while general merchandise sales improved by 1.1%, primarily due to robust performance at the company’s Argos unit. The strong performance in the grocery segment was offset by the general merchandise and clothing segments due to the seasonal impact. This resulted in a 14.6% decline in second-quarter clothing sales and an 8.4% decrease in the first half. The total statutory group sales grew by 3.5% on a year-over-year basis.
The company’s underlying profit before tax was flat at £340 million, while the statutory pre-tax profits were down by 27% to £275 million on prior legal costs.
Additionally, the company announced an interim dividend of 3.9p per share, similar to last year’s payment in the first half. This was consistent with its practice of distributing 30% of the previous year’s total dividend per share.
Is Sainsbury a Good Share to Buy?
On TipRanks, Sainsbury’s stock has been assigned a Hold rating based on one Buy, two Hold, and one Sell recommendations. The Sainsbury share price target of 275.75p is mostly similar to current trading levels and offers modest growth of 1.5%.
It’s worth mentioning that these ratings were last updated in September and may be subject to change following the company’s positive outlook.
