J Sainsbury Plc held its profit forecast for the full year even as it warned that rising inflation means pressure on household budgets will intensify.
Britain's second-largest supermarket chain stuck to its forecast for the full year of underlying profit before tax of £630m ($764m) to £690 million. The grocer's comparable sales, excluding fuel, fell 4pc in the first quarter, according to a statement Tuesday. This was better than analysts expected.
Sainsbury stock was up more than 1.5pc at 9:32 a.m. in London.
The supermarket said in April that normal shopping habits were resuming following the end of lockdowns even as consumers began to feel the pinch from rising inflation. Sainsbury, which controls about 15pc of the UK grocery market and employs 189,000 people, is making savings across the business so it can keep prices low where it can.
Sainsbury said it will invest more than £500m over two years to keep product prices low as "customers are watching every penny and every pound." The supermarket chain is price matching discount rival Aldi on 240 products.
"Our rate of inflation is lower than our competitors' and we're stronger on price than we've ever been," said Chief Executive Officer Simon Roberts on a media call.
Roberts said Sainsbury has a "balanced set of choices" as it works with suppliers to limit costs and to keep products in stock. This follows Kraft Heinz Co. temporarily halting supply of most of its products, including ketchup, to Sainsbury rival Tesco Plc last week in a row over price increases.
Sainsbury is also pricing petrol competitively against rivals and independent fuel retailers, according to Roberts.
"We were the first to pass on the cut in duty on the day it happened," said Roberts. "We're doing everything we can to be as competitive as we can and that's what we have always done and that's what we continue to do."
Sainsbury is facing a challenge at its annual meeting later this week from a group of more than 100 shareholders that want it to accredit itself with the Living Wage Foundation, a lobby group, by the middle of next year. If the vote is passed it would mean future pay increases at Sainsbury could have to be in line with the foundation's assessment of a "real living wage."
Roberts said that Sainsbury already paid a real living wage to staff and was the first large grocer to do so, according to the statement.
"We absolutely believe as a business we should make the decisions on how we pay our colleagues," Roberts said on the media call. "We don't think it's right to make the decision based on an unaccountable third party."
The grocer also said Chief Financial Officer Kevin O'Byrne is stepping down and will be replaced by Blathnaid Bergin, currently the commercial and retail finance director.
Sainsbury may have recorded better than expected sales but it still underperformed Tesco during the quarter, said William Woods, a European food retail analyst at Bernstein.