Sainsbury’s half-year profits slide as sales fall in ‘competitive’ market

The supermarket titan posted a 91.5% nosedive in statutory pre-tax profit to £9m in the 28 weeks to September 21, driven by £229m of one-off costs largely relating to the review of the retailer’s store estate.

On an underlying basis, pre-tax profit declined 15% to £238m year on year, which the grocer attributed to “cost savings, higher marketing costs and tough weather comparatives”.

Group sales slipped 0.2% to £16.8bn, down 0.6% excluding fuel and down 1% on a like-for-like basis.

During the period, grocery sales slipped 0.1%, while clothing and general merchandise sales declined 1.2% and 2.5% respectively.

Sainsbury’s said although the sector “remains highly competitive and consumer outlook remains uncertain”, it maintained its full-year profit guidance as it “expects profits in the second half to benefit from the annualisation of last year’s colleague wage increase and a normalisation of marketing costs and weather comparatives.”

The grocer invested in improving 172 of its supermarket branches and 158 of its convenience stores during the period, with plans to improve 450 supermarkets and 200 convenience stores by the end of the financial year.

Sainsbury’s launched its digital Nectar card during the period, with 2.1 million customers currently using its mobile loyalty app. The grocer also rolled out 123 new value brand products, with 200 due by the end of the financial year.

Chief executive Mike Coupe said: “We have created positive momentum across the business through strategic investments in our customer offer. We have lowered prices on everyday food and groceries, launched a range of value brands and are more competitive on price than we have ever been.

“We are investing in hundreds of Sainsbury’s and Argos stores, introducing new products and services and continually improving service and availability. As a result, customer satisfaction has increased significantly year on year.

“We have set out our plan to create one multi brand, multi-channel business. This will make the combined Sainsbury’s and Argos offer much more accessible for customers and gives us the opportunity to make our business more efficient. We offer great quality at affordable prices with convenient ways to shop.

“I would like to thank colleagues for all their hard work at this busy time of year. We are very much looking forward to delighting our customers throughout the upcoming festive period.”