Sainsbury's hit by £72m loss but Coupe hails 'encouraging signs' of growth

• Sainsbury’s falls to first loss in a decade
• Like-for-like sales and pre-tax profit both drop
• Coupe hails “encouraging signs” of return to growth

The grocer blamed the pre-tax loss on a £753m charge it revealed in its half-year results back in November. That was mostly related to property writedowns on its stores, which fell in value by £900m to £11.1bn during the year.

But trading was also hit as like-for-like sales dropped 1.9% in the 52 weeks to March 14, with retail sales excluding fuel down 0.2%.

Underlying profit before tax was down 14.7% to £681m after group sales fell 0.9% to £26.12bn.The retailer made a property write down of £900m in the year to £11.1bn following a reduction in market rental values.

But boss Mike Coupe said the grocer was making “good progress” with its strategy and hailed “encouraging signs” for future growth.

Coupe said: “The UK marketplace is changing faster than at any time in the past 30 years, which has impacted our profits, like-for-like sales and market share. However, we are making good progress with our strategy, and our investment in price and quality is showing encouraging early signs of volume and transaction growth.

“We know that our customers still want the best quality food at great prices and our strategy is built on our strong foundations of selling great food with a focus on quality, provenance and sustainability. At the same time, we know that our customers want value for money and we have therefore invested in lowering our prices; our prices versus our competitors have never been better.”

Sainsbury’s claims it is beginning to see “encouraging” early signs of volume and transaction growth as a result of its price cuts.

Coupe said: “We also have significant opportunities to grow our business. Clothing, general merchandise and financial services have all performed well over the past 12 months, as have our convenience and online channels. We have a significant ambition to grow these areas over the coming years.”

General merchandise and clothing sales were up over 9% during the year, while Sainsbury’s Bank recorded a 17% increase in operating profit to £62m. The number of grocery orders being placed online grew by 13% in the year as Sainsbury’s invested in the platform to improve service and availability.

The grocer opened 98 convenience stores during the year to deliver more than 16% sales growth within the convenience category and Sainsbury’s continues to add one to two convenience stores per week.

In order to make cost savings, Sainsbury’s has reduced the number of roles in its store support centres by 500, while last month it revealed it was restructuring its store management in a move that will result in 800 job cuts.

As a result, Sainsbury’s has reduced operating costs by £140m in the financial year and expects to make a further £500m of savings over the next three years.

Coupe added: “Sainsbury’s is a fantastic business, run by an experienced management team, supported by great colleagues and underpinned by strong values. I believe we are taking the right decisions to ensure we remain fit for the future and are able to capitalise on our many growth opportunities.”