J Sainsbury PLC on Thursday said profit dropped more than 70% in the first half of its most recent financial year, due to divisional restructuring costs.

The London-based supermarket chain said pretax profit in the 28 weeks that ended September 14 was £131 million, falling 71% from £275 million a year before, due to the company’s restructuring of its Financial Services division.

Sainsbury agreed to sell the core banking business of its Financial Services division to NatWest Group PLC in June, including personal loans, credit cards and retail deposit portfolios. The sale is expected to complete in the first half of 2025.

The loss on disposal for the division was £104 million during the 28-week period, multiplying from a £14 million loss in this accounting category last year, while phased withdrawal costs were £51 million, compared to nothing a year before.

Revenue grew 2.3% to £17.37 billion from £16.98 billion during the first half of the financial year, whilst retail sales including VAT increased 3.1% to £16.30 billion from £15.81 billion last year.

Sainsbury declared an interim dividend of 3.9 pence, unchanged from last year.

The company said it remained ‘confident’ in delivering ‘strong profit growth in the full year, with continued leverage from Sainsbury’s grocery volume and a stronger Argos second-half performance.’

Sainsbury expects to deliver retail underlying operating profit between £1.01 billion and £1.06 billion, which would represent a growth of between 4.5% and 9.3% from £966 million last year.

The company also expects total underlying operating profit in its Financial Services division to be between £15 million and £25 million, lifted from its prior guidance of between break even and £15 million. This would represent between a 15% and 64% fall from £29 million last year.

Chief Executive Officer Simon Roberts said: ‘Our food business is going from strength to strength and we’re making the biggest market share gains in the industry, with continued strong volume growth.

‘Reflecting our leading quality, more customers are choosing Taste the Difference, with sales up 18%, the strongest premium private label growth in the market. And with the biggest ever increase in customers’ value perception, we’re outperforming the market across the whole basket, particularly in core fresh food categories.

‘Our grocery volume growth has delivered strong profit leverage at Sainsbury’s, partially offset by a tough first quarter at Argos. Argos trading has improved through the second quarter and in more recent weeks, so we continue to expect to deliver strong retail underlying operating profit growth and free cash flow generation for the full year.

‘With strong momentum and increasing confidence in the strength of our grocery offer, we’re now investing to bring the best of Sainsbury’s to more people in more locations, including the recent acquisition of Homebase and two Co-op stores.’

Shares in J Sainsbury were down 2.7% at 260.60 pence each in London on Thursday morning.

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