Shore Capital has cut its profit forecasts for J Sainsbury, the FTSE 100 supermarket group, after the retailer reported slowing grocery sales and tougher competition.
The broker lowered its earnings per share forecast by 1% for the year to March 2027, and by around 3% for each of the following two years.
Shore Capital, which acts as broker to Sainsbury, said its previous forecasts had all sat above the market consensus.
It now expects underlying earnings per share of 23.6p this year, up about 10% on last year.
For the year to March 2029, its forecast falls to 27.7p from 28.9p.
The changes follow Sainsbury's half-year results, which showed grocery sales growth slowing to 2.2% in the second quarter from 3.5% in the first.
Management blamed easing inflation and weaker volume growth across the market from mid-summer onwards.
It described the UK grocery market as increasingly competitive but rational, with rivals using more aggressive pricing and promotions to win customers.
Sainsbury also flagged signs of rising inflation in fresh food during the second half.
The company narrowed its profit guidance for the current year to between £1.025 billion and £1.065 billion, which excludes Argos, the general merchandise chain it has agreed to sell.
Shore Capital now forecasts earnings before interest and tax (EBIT, a measure of operating profit) of £1.05 billion this year, down from £1.061 billion.
It cut its forecast for the following year to £1.1 billion from £1.13 billion.
The broker also now expects general merchandise and clothing sales to fall 3% this year, having previously pencilled in 2% growth.
It described the changes for the current year as no more than a tidying up exercise.
Shore Capital still expects free cash flow of more than £500 million and annual share buybacks of £200 million in the following two years.
At 351p, the shares trade on 14.9 times forecast earnings for this year, a rating the broker called undemanding.
It forecasts a dividend yield rising to 4.5% by the year to March 2029.
