Sainsbury's Notes Growth in Food; Guidance Increased; Argos Sales Drop

J Sainsbury plc has published Interim Results for the 28 weeks ended 12 September 2026, advising of 'consistently strong value, quality and service deliver volume and profit growth'. 

Simon Roberts, Chief Executive of J Sainsbury plc, said: “We know many households are finding things tough at the moment and we’re making it easier for customers to enjoy good food every day, whatever their budget. That’s why more people are choosing us for their weekly shop, driving continued volume growth in the first half. 

“We’re delivering trusted value for customers. Through Nectar Prices and the biggest Aldi Price Match in the market, Sainsbury’s is helping customers save on the products they buy most often and inflating behind the market. 

“Innovation is powering our progress. We’re bringing more choice and exciting new food to customers and expanding ranges in more stores. Taste the Difference sales grew by more than six per cent and our restaurant-quality Taste the Difference Discovery range will soon have 200 products. We’re also making healthier choices easy, affordable and delicious through our expanded Full on Fibre range. 

“Our long-term relationships with British farmers and suppliers help us deliver the food customers love at great value, while giving producers a predictable profit and the confidence to invest and plan for the future. My huge thanks go to our colleagues, farmers and suppliers whose passion, expertise and commitment make this possible every day.

“As we progress the sale of Argos and further sharpen our focus on food, we are building a simpler, more focused Sainsbury's. With great value, outstanding quality and exciting new food across our ranges, we’re looking forward to helping customers enjoy a really special Christmas.” 

Financial Highlights 

• Agreed sale of Argos to Swift Partners; transaction expected to complete by the end of February 2027 and full separation expected by February 2029. Argos has been classified as a discontinued operation
  
  
• Sales from continuing operations (excluding Fuel) £14.0bn, up 2.6%. Grocery sales £13.2bn, up 2.9%, reflecting continued volume growth and lower inflation. Sainsbury’s General Merchandise & Clothing sales £0.8bn, down 3.4%, reflecting General Merchandise space reduction and a subdued clothing market. Fuel sales £2.3bn, up 17.8%, reflecting higher wholesale prices
  
  
• Continuing underlying operating profit £525m, up 3.6%, reflecting volume growth, continued cost savings delivery and consistent balanced investment in value, quality, availability and service
  
  
• Statutory loss after tax £(164)m (H1 2025/26: profit £155m), primarily relating to discontinued operations
  
  
• Free cash flow £333m. On track to deliver more than £500m for the full year
  
  
• Completed £200m of previously announced £300m share buyback, with the remaining £100m to be completed in H2
  
  
• Interim dividend of 4.1 pence per share. Consistent with prior years, this is 30 per cent of the prior year’s full year dividend per share

2026/27 Outlook 

The consistent strength of our customer offer helped deliver volume growth, share gains and profit growth in the first half. Looking to the second half, we expect the market to remain very competitive and we will make deliberate, balanced choices to sustain the strength of our offer, investing in value, quality, availability and service.

Reflecting this alongside our first half performance and the classification of Argos as a discontinued operation, we have adjusted our profit guidance. Our previous guidance of £975 million to £1,075 million would be equivalent to £965 million to £1,065 million on a continuing operations basis, removing Argos’s contribution. 

We are now raising the lower end of this range and expect underlying operating profit from continuing operations of between £1,025 million and £1,065 million. We continue to expect to deliver free cash flow of more than £500 million.

Argos

The sale of Argos to Swift Partners will support the next phase of Argos' development, providing greater flexibility to accelerate its transformation programme, pursue its strategic priorities and unlock future growth opportunities. Swift will build on the strength of the Argos brand, multichannel model and store network, bringing expertise and investment, unlocking the future potential of Argos for its customers and colleagues. 

Securing a stronger future for Argos

• Full year trading profit, reported as part of non-underlying discontinued operations, expected to be in line or ahead of last year
  
  
• Sales, now reported within non-underlying discontinued operations, down 1.8 per cent (excluding Marketplace GMV30), partially reflecting highly competitive market and continued slower sales of bigger ticket items such as furniture, particularly during prolonged summer heatwave
  
  
• Sales also impacted by in-year transition of legacy storecard customers to new digital financial services proposition, with strong new customer take-up of proposition outweighed by transitional sales impact
  
  
• Successful launch of Marketplace offer. Number of sellers and product range will continue to expand, with 200,000 additional marketplace and supplier direct fulfilled products in Argos by financial year end
  
  
• On track to deliver accelerated cost savings target, offsetting investment in people, technology, logistics and stores

Insight Perspective

Sainsbury’s interim results are easy to read as another story about grocery resilience. But the more interesting story is how deliberately the retailer is reshaping its business around food, convenience and the productivity of every square foot.

A few things stand out:

1) Sainsbury’s is putting food first – and Argos is the clearest sign yet.

Sainsbury’s has agreed to sell Argos to Swift Partners for at least £120 million, marking a decisive step in its strategy to focus on food retailing. The move follows years of effort to simplify the business and comes as grocery sales grew 2.9% in the first half, compared with a 3.4% decline in General Merchandise and Clothing.

For the wider retail sector, the message is clear: diversification is not always an advantage if it distracts from the core proposition. Sainsbury’s is betting that concentrating investment on food, availability, value and service will create a stronger, more productive business. However, the challenge will be to ensure that the separation of Argos does not undermine the convenience and cross-shopping benefits of having the brand within its supermarkets.

2) Argos is changing ownership, but its physical footprint still matters.

Argos is not simply disappearing from Sainsbury’s stores. The two businesses are expected to retain commercial links covering store locations, collection points, Habitat and loyalty cards, while the transaction is expected to complete in February 2027, with full separation planned by February 2029.

This creates an interesting distinction between ownership and access. Argos will gain the opportunity to develop under a dedicated owner, while Sainsbury’s can concentrate on grocery retail without necessarily losing every benefit of the existing relationship. For retailers operating concessions, collection points or shop-in-shop formats, it is a reminder that a commercial partnership can remain valuable even when corporate ownership changes.

3) The real battleground is productivity, not simply footprint.

Sainsbury’s grocery sales increased 2.9%, while online sales rose 9% and OnDemand sales grew 27%. These figures underline the importance of making stores work harder across shopping, fulfilment and delivery, rather than treating the physical estate as a sales channel alone.

Argos has historically added a general merchandise and collection proposition to that estate. As the two businesses move towards separation, both will need to demonstrate that their respective models can deliver customer convenience and operational efficiency independently. For the wider retail sector, the question is not just how much space a retailer controls, but how effectively that space supports the customer proposition.

The bigger picture: Sainsbury’s planned Argos sale is more than a portfolio change. It signals a sharper definition of what the group wants to be, while raising a wider question for UK retail: how can businesses simplify their operations without sacrificing the partnerships, locations and services that make them convenient for customers?

Source : J Sainsbury plc

Image : J Sainsbury plc

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