Sainsbury’s underlying sales up 9.8%: ‘food inflation is starting to fall’

J Sainsbury plc (LON: SBRY) is in the red on Tuesday even though it reported a year-over-year increase in its quarterly comparable sales.

Sainsbury’s Q1 financial results

The supermarket chain said its like-for-like sales climbed 9.8% in the fiscal first quarter. Sainsbury attributed the growth primarily to the strength in its groceries segment that was up 11%.

Total retail sales increased 9.2% versus a year ago even though clothing sales slipped 3.7% in Q1. In the press release, CEO Simon Roberts said:

General merchandise sales gained 4.0% in the recent quarter. Sainsbury stock is currently up 20% versus the start of the year.

Sainsbury’s guidance for the full year

On Tuesday, J Sainsbury plc also reiterated its guidance for the full financial year.

The retailer expects up to £700 million ($888.4 million) in underlying profit before tax this year. It is also committed to generating at least £500 million of retail free cash flow. According to CEO Roberts:

Sainsbury stock currently pays a dividend yield of just under 5.0%. Wall Street currently has a consensus “hold” rating on it.