Sainsbury's raises profit outlook, boosts shareholder returns

British supermarket group J Sainsbury PLC on Thursday raised its full-year profit forecast and boosted shareholder returns after grocery sales grew and it generated more cash than expected from the disposal of its banking operations.

The company now expects retail underlying operating profit of more than 1 billion British Pounds for the full year.

For the 28 weeks ended Sept. 13, underlying profit before tax rose 10% to 340 million British Pounds, as grocery sales increased 5.3%, the company said.

Sales at its general merchandise business Argos, which Sainsbury's recently decided against selling, grew 2.3%.

Sainsbury's said net cash proceeds from its phased withdrawal from banking will now exceed 400 million British Pounds, higher than originally anticipated.

It will return 400 million British Pounds of these proceeds to shareholders through a 250 million British Pound special dividend and a 150 million British Pound incremental share buyback.

Total cash returns to shareholders for the financial year are now expected to exceed 800 million British Pounds, according to the company.

"Our offer has never been stronger," Chief Executive Simon Roberts said.

"So while we expect the market to remain highly competitive, our momentum gives us real confidence as we head into Christmas and we have strengthened our profit guidance today."