Sainsbury’s has outlined plans to continue investing in its growth while returning significant value to shareholders, signalling confidence in its financial health despite an increasingly competitive supermarket sector and uncertain economic climate.

The supermarket giant confirmed it will make a one-off payment of £250 million to shareholders following the completion of the sale of its core banking business to NatWest Group. This move comes alongside announcements to increase total store floor space by 3% in the coming months, marking the largest investment in expanding physical locations the company has made in over a decade.

Simon Roberts, chief executive of Sainsbury’s, highlighted the company’s strategic focus on growth during the group’s recent annual results announcement. “We are making the largest investment in expanding our store space for over a decade,” Mr Roberts said, explaining that the firm plans to open new supermarkets in key locations and extend food space within many existing stores. This expansion underlines Sainsbury’s belief in its prospects amid a competitive market.

The group has also benefited from a four-year transformation programme, which concentrated on strengthening its grocery offerings by investing £1 billion in lowering prices to meet competition from discount chains like Aldi and Lidl. In the latest financial year, Sainsbury’s reported a 3.2% increase in like-for-like sales excluding fuel, demonstrating solid performance.

Despite concerns about the outlook for consumer spending — exacerbated by the uncertainty linked to global trade tensions and inflationary pressures — analysts from Shore Capital found no indication of a slowdown over the Easter period. Visiting stores during the holiday weekend, they observed that “Sainsbury is on the front-foot in a very competitive but still rational British grocery sector,” and noted that their visits did not support the widely discussed notion of a “UK grocery price war.”

Recent market activity also saw several supermarkets engage in significant price reductions on seasonal vegetables over Easter, suggesting an ongoing drive to encourage consumer expenditure. However, these pricing strategies have yet to reflect a widespread market retreat.

Other leading supermarket groups’ recent results present a varied picture. Tesco posted a 3.1% rise in like-for-like sales for the year ending 22 February and has notably repurchased £1 billion in shares since April last year. It also paid dividends of £864 million over the same period. Meanwhile, Morrisons saw a 2.1% increase in like-for-like sales in the 13 weeks to 26 January.

Conversely, Asda has reported challenges; in March, it announced a 3.4% decline in like-for-like sales for 2024 and is expanding its Rollback discount scheme to cover 25% of its product range as part of its response to market pressures.

The Herald (Glasgow) reports that the confidence conveyed by Sainsbury’s directors through planned expansions and substantial shareholder payouts follows the group’s strategic efforts to strengthen its core supermarket business, an approach that appears resolute despite external economic factors and intensified competition.