J Sainsbury PLC on Thursday said pretax profit saw a considerable drop in its latest half-year but revenue increased with particularly strong grocery sales.

The London-based supermarket chain said pretax profit fell 27% to £275 million in the six months ended September 16, from £376 million the previous year.

Revenue increased 3.5% to £16.98 billion from £16.41 billion, with retail sales rising 3.2% to £16.67 billion.

The cost of sales increased to £15.72 billion, while administrative expenses increased to £834 million. Sainsbury’s also said its decreased profit mainly reflected non-cash movements and one-off income from legal settlements the previous year. On an underlying basis, pretax profit was flat on-year at £340 million.

Sainsbury’s declared a 3.9 pence per share interim dividend, unchanged from the prior year.

Grocery sales increased 10% to £12.4 billion, with volume growth throughout the half year ‘driving record market share gains and consistent market outperformance’. Sainsbury’s noted that it ‘continued to prioritise value for customers, inflating behind key competitors’.

General Merchandise sales increased 1.1% to £2.9 billion. However, clothing sales fell 8.4% to around £500 million, which Sainsbury’s said was due to reduced demand thanks to an unexpectedly cool summer and warm early autumn.

‘Food is firmly back at the heart of Sainsbury’s,’ declared Chief Executive Officer Simon Roberts. ‘We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us...I’m pleased to say food inflation is coming down and we are passing savings on to customers.’

Going forward, Sainsbury’s said that despite ‘tough comparatives’ and Financial Services headwinds it expects to report between £670 million and £700 million in underlying pretax profit. It also raised its retail cash flow guidance to £600 million from £500 million.

‘We’re ready to give customers at Sainsbury’s and Argos everything they want to have a brilliant Christmas,’ Roberts proclaimed. ‘We’re helping everyone to treat themselves with fantastic value and more delicious new food than ever before. As we head into this key trading period, we are encouraged by our strong momentum and we remain fully focused on delivering for customers and shareholders.’

Shares in Sainsbury’s were up 4.8% at 274.36 pence each in London on Thursday morning.

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