The J Sainsbury (LSE: SBRY) share price stays regular, although the UK grocery store large is the newest to report stress from escalating price wars.

With full-year outcomes for the yr to March 2025, the corporate stated it expects no progress in retail underlying working revenue within the 2025-26 yr. The yr simply ended introduced in £1,036m. However Sainsbury solely expects to report about the identical once more for the approaching yr.

Value wars

In March Asda launched a brand new marketing campaign slicing the costs of round 1,500 strains to attempt to win again falling gross sales. Since then Tesco spoke of “a further increase in the competitive intensity of the UK market” in its FY outcomes launch. It says it expects adjusted working revenue to dip in 2025-26.

Nonetheless, no less than Sainsbury isn’t predicting a fall in revenue as Tesco is. And I reckon that reveals a profit from its barely extra elevated market place, the place it isn’t slugging it out for the bottom of the low in pricing.

Buyers don’t appear too fazed by the competitors menace. The Sainsbury’s share price initially rose 4% when the market opened. As I write it’s softened to about 1.5% forward. That’s not a lot, nevertheless it’s optimistic.

We would see a flat interval this yr. However it could be on the again of a really stable 2024-25. And I nonetheless charge it as a comparatively optimistic outlook for an organization in such a pressured sector.

Revenue and money

That £1,036m retail underlying working revenue represents a 7.2% rise on the earlier yr. Complete underlying revenue earlier than tax jumped 8.6% to £761m. Underlying earnings per share noticed a barely smaller, however nonetheless welcome, 4.5% acquire.

However right here’s the place I feel Sainsbury may stand out for long-term dividend buyers.

Retail free money circulation of £531m enabled the corporate to raise its full-year dividend by 3.8%. That’s properly above the UK’s slowing inflation charge. The previous yr additionally gave shareholders a lift within the type of a £200m share buyback.

Plans for 2025-26 embody additional buybacks of no less than one other £200m. And we should always see a particular dividend, funded by financial institution disposal proceeds of £250m. Is that this wanting like a money cow, or what?

Hazard forward?

Debt will be one of many greatest killers of long-term dividend prospects. And at first look, I wasn’t too satisfied to see internet debt at Sainsbury rise by £204m over the yr to £5,758m.

However wanting nearer, that features lease liabilities, that are actually only a dedication to future spending. Excluding lease liabilities, internet debt drops to only £264m. That doesn’t fear me within the slightest.

There are nonetheless dangers forward for Sainsbury in at present’s unsure market. The corporate won’t anticipate to be hit too exhausting by price competitors within the coming yr. But when we’re within the type of lengthy cut-price battle we’ve seen up to now, that would hand a giant benefit again to Tesco.

Nonetheless, with a forecast dividend yield now up to five.2%, Sainsbury needs to be price severe consideration for revenue buyers.