Sainsbury’s investors will be hopeful that the supermarket group can shrug off potential pressures from the Middle East conflict to continue its strong recent spell.
Shares in the UK’s second largest supermarket chain sit close to a 12-year high after increasing its share of the grocery market further in recent months.
The London-based retailer has grown its sales on the back of investment in pricing to improve how customers see its value and strong demand for its premium Taste the Difference range.
Higher revenues and efficiency improvements are expected to lift Sainsbury’s to stronger profits despite pressure from higher taxes and labour costs.
Analysts expect Sainsbury’s to reveal an underlying pre-tax profit of £730 million, an increase of 3% year-on-year, when it updates the market on Thursday April 23.
Nevertheless, their will be a firm focus on the group’s outlook amid an uncertain economic backdrop caused by the ongoing conflict in the Middle East.
On Thursday, top rival Tesco said the conflict had increased uncertainty over its guidance for the rest of the year.
The conflict, which started in late February, has already caused a spike in petrol and diesel prices, with the Food and Drink Federation also warning that it could drive food inflation above 9% for the year.
Investors will be hopeful the retailer can show it is still on a positive trajectory despite the conflict, which could also hit consumer confidence.
In its previous update in January, Sainsbury’s revealed positive growth over the key Christmas period, with a 5.1% rise in total grocery sales over the six weeks to January 3.
The growth was helped by strong demand for Taste the Difference products, but Argos sales fell 2.2% in the period and Sainsbury’s non-food and clothing sales were 1% lower.
Shareholders will also be keen for the retailer to increase their returns on the back of Sainsbury’s recent strong performance.
Danni Hewson, AJ Bell head of financial analysis, said: “After recently upgrading free cash flow guidance to more than £550 million, there will inevitably be hopes of further share buybacks on top of another increase in the dividend.
“Though an uncertain backdrop might cause management to be more circumspect.”