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Sainsbury’s heralds “pivotal year” but profits down
Sainsbury’s boss Mike Coupe has heralded a “pivotal year” for the retailer, buoyed by the newly acquired Argos business – but profit and like-for-like sales both fell.
A boost from Argos helped group sales at the UK retailer jump 12.7% to £29,112 million, but like-for-likes were down by 0.6% and underlying profit before tax was hit, falling 1% to £581 million, down from £587 million last year. This was attributed to cost inflation and investment in the customer offer, but was offset by the £77 million from Argos, and cost savings of around £130 million.
However the company argued that its food performance was none-the-less “resilient” in a challenging market. It was also seeing “significant progress” and benefitting from ongoing investment in quality, price and innovation, it said.
Total transactions had increased by nearly 3% to 26 million per week.
Group chief executive Mike Coupe said the retailer had “significant progress” delivering and accelerating its strategy, and he was very pleased with the progress made since Sainsbury’s acquired Argos. The retailer is accelerating its plan to open 250 Argos Digital stores in Sainsbury’s supermarkets and is on track to deliver a £160 million EBITDA ‘synergy target’ from the Argos acquisition six months early, but Coupe argued that food remained the core of the business.
“Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price. We are also investing in growth areas of the business to meet the changing ways that customers shop,” he said.
This was seen in the growth in Sainsbury’s groceries online and convenience channels, up more than 8% and 6% respectively, while the general merchandise and clothing outperformed the market.
“The market remains competitive and the impact of cost price pressures remains uncertain. However, we are well placed to navigate the external environment and we remain focused on delivering our strategy,” Coupe concluded.
Net debt was reduced by £349 million to £1,477 million.