Sainsbury's waiting on CMA

In the meantime, Sainsbury is busy reaping the rewards of its last big acquisition – Argos. Group sales rose 3.5 per cent during the first half to £16.9bn, although the like-for-like improvement was less dramatic at just 0.6 per cent. Statutory profits fell as a result of ongoing integration work, but underlying retail operating profits actually grew by more than a fifth to £335m, driven mainly by Argos cost synergies. In fact, cost savings exceeded £120m during the period, while retail free cash flow grew by £183m to £619m thanks to strong cash generation and the timing of bank capital injections. Overall, the group delivered £63m-worth of cash profit synergies from Argos, taking the total to £150m to date. Since the period-end, bosses say they’ve met the £160m target nine months ahead of schedule. In the longer term, the group is still aiming to claw back £500m in cost savings over the next three years.

Echoing sentiments from Marks and Spencer (MKS) a day before, margins at the general merchandising division – which sells clothing and homewares – remain under pressure, even though sales growth of 1.5 per cent outperformed the wider market. That’s because those sales were mostly weighted towards lower-margin consumer technology products.

Forecasts for the company are suspended ahead of the impending merger, but in July, broker Shore Capital said it expected FY2019 EPS to report flat at 20p.