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Sainsbury’s sales and profits fall despite price cuts

Sainsbury’s has reported a slump in pre-tax profits, with sales falling despite price cuts and new value ranges.

The supermarket chain, which also owns Argos, said it had achieved “positive momentum in grocery market share” in highly competitive times.

But it reported a 0.2% decline in group sales to £16.8bn over the 28 weeks to 21 September – its first half – with like-for-like sales, a comparable measure, falling 1%.

Sainsbury's ends supermarket bogof and multibuy deals
Image: Sainsbury’s has lowered prices on more than 1,000 lines since February

Trading pre-tax profits fell 15% to £238m. Sainsbury’s blamed the phasing out of cost savings and tough weather comparisons.

On a statutory basis, pre-tax profits which include one-off costs came in at £9m. The figure covering the same period last year was £107m.

The company said this was mainly explained by a previously-flagged £203m writedown in the value of its estate that was mainly non-cash and reflected store closures.

Sainsbury’s said its grocery and clothing offerings had a better performance in the second quarter than in the first.

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Its chief executive, Mike Coupe, is under pressure to grow revenue after being accused of taking his eye off the ball as he fought for a £12bn merger with Asda.

The deal was blocked on competition grounds in April.

Mr Coupe said of the first half performance: “We have created positive momentum across the business through strategic investments in our customer offer.

The CEO of Sainsbury's feels that the timing of Brexit is not helpful
Image: Sainsbury’s boss Mike Coupe has been under pressure to grow sales and profits following his failed bid to merge the chain with Asda

“We have lowered prices on every day 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.”

The company guided that the retail sector remains “highly competitive” – a consequence of the price war that has been raging for years as discounters Aldi and Lidl capture market share from the ‘big four’ chains.

Sainsbury’s raised its interim dividend by 6% and shares, down 22% in the year to date, opened 1% higher.

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