Sainsbury's has warned that a challenging market meant it could take up to five years to deliver sustainable profit growth, despite a robust performance from Argos which it bought last year. 

The supermarket group reported a third fall in annual profit in a row today, hurt by price cuts and cost inflation, and confirmed analysts' forecasts for another decline in 2017-18. 

Last year Sainsbury's expanded in areas such as electrical goods when it bought Argos-owner Home Retail for £1.1 billion, which it said has gone well so far. 

"Our job is to build a business for the future," said chief executive Mike Coupe, who outlined his strategy for the business two and a half years ago. 

"The UK grocery industry is one of the most challenging, if not the most challenging, in the world but we think over a three to five year period we can deliver strong and steady profit growth," he said. 

Sainsbury's said Argos contributed a better than expected profit of £77m in the second half and would deliver a £160m boost to earnings six months early. 

It also said it would speed up a plan to open 250 Argos Digital stores in its supermarkets. 

Sainsbury's made an underlying pretax profit of £581m in the year to March 11, down from £587m made the year before. The average forecast by analysts was £578m. 

The result reflected intense price competition, driven by German discounters Aldi and Lidl, as well as cost inflation, offset by cost savings of £130m and the contribution from Argos. 

Group sales rose 12.7% to £29.1 billion, but Sainsbury's' own like-for-like sales fell 0.6%.

Morrisons and Tesco are both in turnaround mode after going through disastrous periods while Sainsbury's market share has remained broadly stable over the last five years. 

Some analysts believe Sainsbury's is vulnerable to further price cuts by Tesco and a recovering Asda and the supermarket's chief financial officer Kevin O'Byrne said he was comfortable with an average profit forecast of £573m for 2017-18, meaning a drop for yet another year. 

Some analysts also say Argos increases Sainsbury's exposure to the threat of Amazon and to higher import costs at a time when pressure on discretionary purchases is building as inflation grows and wage growth is muted.