Sainsbury's, the UK's second biggest supermarket group, today beat forecasts with a 20% increase in first-half profit, as it delivered cost savings from its Argos general merchandise chain ahead of schedule.
The group is seeking regulatory approval to take over the third biggest supermarket chain Asda.
It said today that the outlook for British consumers was uncertain heading into the key Christmas season.
"The grocery, general merchandise and clothing markets continue to be highly competitive and very promotional," it said.
However, the firm said it remained on track to meet analysts' average pretax profit forecast for its 2018-19 financial year of £634m, up from £589m made in 2017-18.
For its first half to September 22, Sainsbury's made an underlying pretax profit of £302m - ahead of analysts' mean forecast of £280m and the £251m made the same time last year.
Group sales rose 3.5% to £16.9 billion and the interim dividend was held at 3.1 pence per share.
Sainsbury's said that while like-for-like sales, excluding fuel, increased by just 0.6%, it benefited from cost savings of £121m - some £63m of which were synergies from the Argos business Sainsbury's purchased in 2016.
"We have delivered a solid first half performance and profit has increased because we have delivered significant Argos synergies ahead of schedule," the company's chief executive Mike Coupe said.
He said sales of food and general merchandise were boosted by Britain's hot summer, but general merchandise margins remained under pressure.
Although industry data shows Sainsbury's trading performance is lagging rivals, its shares are up 32% this year on the back of April's agreed £7.3 billion takeover of Walmart-owned Asda.
This deal that could see the group leapfrog Tesco as Britain's biggest retailer.
According to recent industry figures, Sainsbury's has seen the weakest trading among Britain's big four grocers, which also includes fourth-ranked Morrisons.
That has led some analysts to question whether Sainsbury's store standards have suffered from its pursuit of at least another £500m of cost savings in the three years starting in 2018-19, having already achieved £540m in the prior three years.
Britain's Competition and Markets Authority (CMA) said last month it expected to issue provisional findings on Sainsbury's planned purchase of Asda early next year.