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City expects Sainsbury's to produce the goods

Supermarket chain tipped to turn in half-year profits of £269mln
City expects Sainsbury's to produce the goods
Sainsbury's upped its annual profit forecasts in a September trading update

The City is hoping Sainsbury's (LON:SBRY) will live up to expectations in half-year results on Wednesday after a positive update a month ago.

The supermarket group modestly upgraded full-year profit expectations at the end of September after sales and cost savings topped hopes.

It came as a pleasant surprise to brokers deluged by bad news from the established supermarkets, who have faced a battering from discounters and online rivals.

Analysts duly upped their forecasts, lifting the consensus to £573mln from £548mln, with a half-year estimate of £269mln – down nearly 30% year-on-year.

But Sainsbury's will face pressure to produce the goods and keep up the performance.

City scribblers are set to comb the results for self-help measures such as cost-cutting and efforts to capitalise on growth areas such as online sales.

The Share Centre's Graham Spooner said: "Given the fierceness of competition in the sector, Sainsbury’s continues to perform relatively well with market share standing around 16.1%. Further updates on cost savings and reduction in capital expenditure will be of interest."

Hargreaves Lansdown's Keith Bowman said: "Having flagged “an improvement in our key trading metrics” at the Q2 update, management outlook comments will be closely scrutinised.

"Ahead of the update, and with the company’s differentiated offering set against falling profitability, analyst consensus opinion currently points towards a hold."

Shares in the chain were 2.2p or 0.8% down at 271.1p in afternoon trading on Tuesday.

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