LONDON, April 23 (Reuters) - British supermarket group Sainsbury’s warned on Thursday that uncertainty around how the Iran war will affect consumers is clouding its outlook and could drag profits
Sainsbury's echoes Tesco warning over Iran war, hitting its shares
Impact of Iran War on Sainsbury's Financial Outlook
By James Davey
LONDON, April 23 (Reuters) - British supermarket group Sainsbury's warned on Thursday that uncertainty over the impact of the Iran war on shoppers is clouding its outlook and could drag profits lower this year, echoing concerns voiced by market leader Tesco.
The warning knocked Sainsbury's shares down 5% in early deals. The group, which has a 15.6% share of the UK grocery market, said the conflict in the Middle East would impact both customers and its business.
It warned that the duration and extent of the war's impact were "very uncertain", as it forecast total underlying operating profit of between 975 million pounds and 1.075 billion pounds ($1.32-$1.45 billion) for its 2026/27 financial year.
Financial Performance and Market Reaction
General Merchandise Market Subdued
GENERAL MERCHANDISE MARKET SUBDUED
Sainsbury's, whose share price has risen more than 30% over the last year, made retail underlying profit of 1.025 billion pounds in the year ended February 28, down 1.1% on 2024/25 but in line with expectations.
Analyst Commentary
"The problem is the guidance range ... is below current consensus of 1.1 billion pounds and therefore we will see consensus trend downwards," Bernstein analysts said in a note.
Performance of Sainsbury's Divisions
Sainsbury's said it had made a positive start to its new financial year and expected to continue to outperform the grocery market, although trading at its general merchandise arm Argos continued to reflect subdued conditions.
About one quarter of Sainsbury's sales are non-food, making it more exposed than Tesco to any slowdown in discretionary spending.
Consumer Sentiment and Inflation
British Consumers Gloomy
BRITISH CONSUMERS GLOOMY
British consumers are gloomier about the economy than at any time since records began in 1978, according to a survey published on Wednesday, with the Iran war and soaring oil prices weighing heavily on households.
Food Inflation and Retail Sales
UK food inflation rose to 3.7% in March, official data showed. Trade body the Food and Drink Federation has warned food prices could rise by almost 10% by December. Last week, Tesco said it did not recognise that number, as it warned its own profit could fall this year because of the Iran war.
Sainsbury's like-for-like sales rose 3.1% in the fourth quarter of its 2025/26 year, slowing from growth of 3.4% in the third quarter.
Full-year total retail sales, excluding VAT and fuel, rose 4.3% to 30 billion pounds.
($1 = 0.7412 pounds)
(Reporting by James Davey. Editing by Sarah Young and Mark Potter)
