Sainsbury’s boss urged Rachel Reeves not to drink inflation to retailers and their suppliers and said shoppers will spend his budget later this month.
Simon Roberts, the chief executive of the UK’s second biggest supermarket, which also owns Argos and Habitat, said his customers were “not going to be careful because of the uncertainty out there and [household] budgets are tight”.
He said Argos had launched deals for its Black Friday promotional event earlier than last year which had caused “some delays in seeing” households wait for more tax.
Roberts said it was unclear whether food price inflation was slowing, adding: “Inflationary pressures on the cost base are significant this year… What we don’t want to see is [in the budget] is the additional effect that may cause more inflation.
“No one wants to see inflation that much higher.”
He pointed to a £140m increase in National Retail Insurance and new packaging regulation costs, which should work in an industry and a Sainsbury’s business containing costs. “
He said that the retailers have forwarded their case to avoid additional business rates in many stores, which would affect many supermarkets.
Roberts spoke about the government’s tax plans as he revealed that Sainsbury’s will open month on month making more than £1bn.
Analysts from Shore Capital, Sainsbury’s broker, said they upgraded profit expectations by £20m to £1.02bn.
The company also said it would pay a £250m special dividend to shareholders, after proceeds from the sale of the bank came in ahead of expectations by more than £400m. It is also said to spend a further £150m on buying back shares – another way of returning funds to investors.
Asked why he proposed new taxes that could fuf inflation while paying more than £400m put shoppers in the last five years and the increase in workers’ compensation. “It’s about making sure we get equal rights for all stakeholders,” he said.
Despite what it called an “extremely competitive market”, the UK’s second largest grocer said market share was up six months to 13 months to 10 months to 10 months to 13 months, led by a 10.2% increase in grocery sales.
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Pre-tax profit rose 5% to £271m in the half-year after £69m of one-off costs at cafes and deli counters.
The company said it opened six supermarkets in the middle of the year and will open another six supermarkets by the end of March and then 12 next year in new stores. It also plans to open 30 convenience stores this year up to 28 next year.
It comes after Sainsbury’s bought 13 former homebase owners in 2024 followed by a number of co-op outlets.
Roberts, said: “Our offer has never been stronger. So while we expect the market to remain competitive as we head into Christmas we are strengthening our profit guidance today.”
The figures indicate a step up in grocery sales in the second quarter, as inflation lifted and Sainsbury’s stalled sales growth at Argos.
Sainsbury’s said ARGOSs were strong due to the warm summer and efforts to improve service and prices at a very early stage of stock-out after a cold summer.