Sainsbury’s profits fall as like-for-like sales dip

The supermarket giant said underlying pre-tax profits dropped 10.1% to £277m during the 28 weeks to September 24.

On a statutory basis, pre-tax profits increased 9.7% during the period. Sainsbury’s said the underlying figures excluded synergies from the Argos deal and the impact of the Homebase disposal, which was acquired by Wesfarmers in February.

Sainsbury’s first-half group sales increased 2.1% underlying. Like-for-like sales declined 1%, although the grocer reported transactional growth across all channels.

The grocer’s online sales increased 8% during the period.

Convenience sales were up 6% as the retailer opened 16 convenience stores. The supermarket is also trialling six Sainsbury’s Local stores in service stations in partnership with Euro Garages.

Sainsbury’s general merchandise sales increased 5% in the first half while clothing sales grew nearly 1%.

The grocer rolled out Argos in-store shops across 22 of its supermarkets during the period and plans to have Argos outlets across 30 stores by Christmas.

The retailer plans to roll out 200 digital collection points for shoppers across Sainsbury’s store estate.

The grocer’s continued to drive its initiative on everyday low prices during the period, which chief executive Mike Coupe said it delivered in “challenging market conditions”.

Coupe said: “The acquisition of HRG accelerates our strategy to give customers choice, convenience, speed and flexibility in when, where and how they shop.

“Food will always be at our heart and we are strengthening our clothing, general merchandise and financial services offers to realise the potential of the group. The combination of our products, services, customer data and fast delivery networks gives us a strong platform for growth.”

Sainsbury’s full-year profit expectations remain unchanged, but the grocer expects its profits to decline in the second half of the year owing to continued investment in price and cost inflation.