Tesco, Asda and Morrisons have been cutting prices to try to combat the discounters, with Morrisons firing the latest salvo last week with reductions averaging 17 percent on 1,200 products.
Analysts have expressed concern about a possible contagion of price cuts hitting margins and earnings across the industry.
Sainsbury's made an underlying pretax profit of 798 million pounds ($1.36 billion) in the year to March 15.
That compares with analyst forecasts in a range of 750-810 million pounds, with a consensus of 782 million pounds, and 756 million pounds made in the 2012-13 year.
Read MoreSainsbury's Justin King steps down, shares drop
Group sales, including VAT sales tax, rose 2.8 percent to 26.4 billion pounds, with sales at stores open over a year, including VAT but excluding fuel up 0.2 percent.
Though Sainsbury's 16.8 percent market share is its highest for a decade, its nine year run of quarterly sales growth came to an end in its fourth quarter when like-for-like sales fell 3.1 percent.
The results are Justin King's last as chief executive. After 10 years at the helm he will be succeeded by Mike Coupe, currently commercial director, after the firm's shareholders' meeting in July.
Sainsbury's proposed a full year dividend of 17.3 pence, up 3.6 percent.