Sainsbury’s Says Middle East Conflict Risks Hitting Profit

A sign above the entrance to a Sainsbury's supermarket in London. Photo by Chris Ratcliffe /Bloomberg

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(Bloomberg) — J Sainsbury Plc said profit could slip this year as Britain’s second-largest grocer faces higher costs and consumer uncertainty triggered by the conflict in the Middle East.

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The retailer forecast underlying operating profit from retail of between £975 million ($1.3 billion) and £1.08 billion, according to a statement Thursday. That compares to £1.03 billion in the 12 months ended Feb. 28, which was slightly lower than the previous year and analyst estimates.

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It is the latest British retailer to warn about the fallout of the Iran war, which has upended global shipping and energy markets and fueled inflation in the UK. Though the full impact is not clear — and much depends on how long the conflict lasts — it comes with household budgets already stretched.

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The UK economy was growing strongly prior to the war but British consumers now face higher energy bills and higher costs for imported products, especially those linked to oil prices. That risks putting off shoppers when retailers were already grappling with measures in the government’s revenue-raising budget.

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Under Chief Executive Officer Simon Roberts, Sainsbury’s has been using its Nectar loyalty card offers and price-matching to boost its share of the ultra-competitive UK grocery market. The strategy is paying off, and Sainsbury’s said it now has about 1.2 million more customers choosing it for their big weekly grocery shop than it did five years ago.

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Shares of Sainsbury’s have climbed 8.7% this year through Wednesday’s close, narrowly trailing rival Tesco Plc. They jumped 19% in 2025.

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But it blamed higher costs for the slight dip in operating profit last year, with the war in Iran poised to further boost inflation. Sainsbury’s also said Argos, its general merchandise unit, continued to operate in a subdued market. Talks to sell the retailer to JD.com Inc. fell apart last year.

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Chancellor of the Exchequer Rachel Reeves met supermarket bosses — including Roberts — this month to discuss how to ease the impact of any cost inflation from the conflict on prices at the checkout. Ministers have expressed frustration about the US decision to go to war and its knock-on impact on Britain.

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Tesco warned last week the war in Iran is creating uncertainty for shoppers, while fashion and homeware company Next Plc has said it will start passing on higher energy and freight costs to customers if the conflict — which began at the end of February — lasts more than three months.

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(Updates with details from fourth paragraph.)

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