J. Sainsbury's Plc (JSAIY) posted modestly stronger full year earnings Wednesday even as sales rose by more than 12% in the country's fiercely competitive grocery store market thanks to sales at its Argos discount retailing division.

Sainbury's, Britain's second-largest supermarket, said full year underlying profits before tax came in at £581 million, marginally higher than the £578 million tally anticipated by analysts but down 1% from the previous fiscal year. Group sales for the full year period rose 12.7% to £29.11 billion, the company said, well ahead of the £25.5 billion.

"This has been a pivotal year and we have made significant progress delivering and accelerating our strategy," said Group CEO Mike Coupe. "Food is the core of our business and we are committed to helping customers live well for less. Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price."

"We are also investing in growth areas of the business to meet the changing ways that customers shop," Coupe added. "Sainsbury's design-led General Merchandise and Clothing both outperformed the market and we saw strong growth in Sainsbury's Groceries Online and Convenience channels."

Sainsbury's said it would commit to a further £500 million in cost cuts over the next three years, starting in the 2018/2019 fiscal year, after having achieved around £130 million in the past fiscal year.

Agros, the group's online and discount retailer, contributed around £77 million to Sainbury's bottom line, the company said. 

Sainsbury's shares were marked 5.42% lower by mid-day in London trading and changing hands at 264.1 pence each, trimming their year-to-date gain to around 6% but still well ahead of the 2% gain for the FTSE 350 General Retailers Index benchmark.