Sainsbury’s profits slide as strong sales fail to offset Covid costs

1 Comment

Sainsbury’s has recorded a sharp drop in profits over the past year with its results ”heavily influenced by the pandemic”.

The grocer’s underlying profit before tax fell 39% to £356m in the 52 weeks to March 6, 2021, as strong sales failed to offset £485m of directly Covid-related costs.

Sainsbury’s reported strong sales growth across all categories, with grocery up 7.8% and general merchandise up 8.3% year on year.

Simon Roberts Sainsbury's CEO

Simon Roberts said Sainsbury’s is ‘transforming the way we work’

Digital sales fared particularly well, up 102% compared with the previous financial year.

Sainsbury’s more than doubled its online grocery sales from 8% to 17% of the total, while its Argos fascia grew digital sales by 68%.

The retailer attributed some of its sales growth to its focus on value including the extension of its Price Lock guarantee, its Aldi Price Match programme and the Sainsbury’s Quality range.

However, it incurred Covid costs related to actions “to help keep our colleagues and customers safe” including the payment of self-isolating colleagues and protective measures in stores. Sainsbury’s also made the decision to forego business rates relief for its stores.

Chief executive officer Simon Roberts said: “Above all else, I want to recognise the extraordinary job that my colleagues have done over the last 12 months. Their efforts have been nothing short of heroic as our entire team went above and beyond every day for our customers and communities. I am enormously grateful to the whole team for the way they have risen to the huge challenges this year and so selflessly looked after our customers and each other.

“This year’s financial results have been heavily influenced by the pandemic. Food and Argos sales are significantly higher but the cost of keeping colleagues and customers safe during the pandemic has been high.

“We have a bold three-year plan to put food back at the heart of Sainsbury’s and drive improved performance. We are transforming the way we work and I am encouraged by how all of our teams have responded and the early momentum and performance towards our plan.

“Like our customers, we are all looking forward to things feeling more normal over the coming months and getting excited about a summer of celebration but we are also cautious about the economic outlook. While there is much that we cannot predict in the year ahead, we are absolutely focused on delivering for our customers and shareholders.”