J Sainsbury (SBRY.L), d/b/a Sainsbury's, shares were down 5% during Thursday's midday trade, as the company's fiscal 2027 guidance came in below market expectations amid the ongoing Middle East conflict.
The British supermarket chain projects its fiscal 2027 total underlying operating profit to come within the 975 million pounds sterling and 1.08 billion pounds range, below the consensus estimate of 1.10 billion pounds, according to research firm RBC Capital Markets. The group also maintained its guidance of retail free cash flow to exceed 500 million pounds, against the market forecast of 551 million pounds.
Even with the cautious outlook, Sainsbury's preliminary total retail sales, excluding fuel, for the 52 weeks ended Feb. 28, 2026, was 4.3% higher year over year to 29.99 billion pounds. Including fuel, total retail sales climbed 2.8% to 33.55 billion pounds.
Sainsbury's namesake stores generated 25.88 billion pounds in sales, up 4.9% from the 52 weeks ended March 1, 2025. The growth was underpinned by a 24.26 billion-pound performance in grocery, which the retailer attributed to its Taste the Difference product range and value initiatives such as Nectar Prices, Aldi Price Match and Your Nectar Prices.
"We will do everything we can to support our customers and colleagues over the coming months, with absolute focus on keeping prices low. We have made a positive start to the new financial year, with continued strong Grocery momentum," Chief Executive Simon Roberts, noting the company is pledging over 5 billion pounds to British and Irish farmers to bolster the supply chain amid growing market volatility.
On the capital allocation side, Sainsbury's board recommended a final dividend of 0.096 pound per share, slightly lower than the 0.097 pound per share it paid a year ago. The proposed distribution takes the full-year dividend to 0.137 pound per share from 0.136 pound per share a year ago, which the company noted aligned with its progressive dividend policy.
For fiscal 2027, the group also plans to repurchase 300 million pounds worth of shares, comprising a 200 million-pound core buyback alongside an additional 100 million-pound return derived from net bank disposal proceeds.
Despite adopting a negative sentiment on Sainsbury's full-year results, RBC sees the company as a "strong player" in the UK food retailing segment. "We are encouraged by the progress it has made in improving its price-value credentials, and we think work to showcase the Food range better, combined with a more curated General Merchandise offering, and space growth is supporting good market share gains now. We expect this to continue through 2026," the research firm wrote.