Sainsbury’s has indicated that profits will be flat over the next year as it faces intensifying competition from rivals on price and a surge in costs.<br />It came as the UK’s second largest supermarket chain reported that sales and profits grew over the year to March.<br /><br />The retailer said full-year sales, excluding fuel, rose by 4.2 per cent to £26.6 billion as it increased its share of the UK grocery market.<br /><br />Meanwhile, retail underlying operating profits rose by 7.2 per cent to £1.03 billion for the year.<br /><br />It told shareholders that these profits will be about £1 billion for the new financial year as stronger sales volumes are expected to be offset by weaker profitability.<br /><br />Earlier this month, rival Tesco said it would see weaker profits as it sets more money aside to invest in price cuts.<br /><br />It comes amid pressure from Asda, the UK’s third largest chain, after its returning boss Allan Leighton said it would slash prices in a bid to turn around its fortunes.<br /><br />On Thursday, Sainsbury’s said it was growing market share after investing £1 billion in improving its pricing.<br /><br />The company also said it was launching its “biggest investment in expanding our store space in over a decade”, with about 40 new stores opening this year.<br /><br />Grocery sales grew by 4.5 per cent for the past year, while sales at its Argos arm slipped by 2.7 per cent to £4.9 billion.<br /><br />However, the retailer said it has started the new financial year with “good trading momentum” across all its brands after Argos grew in the final quarter.
