Underlying profits rose 20% to £302m, but nearly halved when a host of exceptional costs were taken into account.
Adding Argos stores in Sainsbury’s outlets was “driving an increase in trading intensity”, the retailer said.
Sainsbury’s said its 20.3% rise in underlying pre-tax profits to £302m for the six months to 22nd September was largely down to £160m in cost synergies from its takeover of Argos being delivered ahead of schedule. Sainsbury’s opened a further 60 Argos stores in its supermarkets over the six months, bringing the total to 251.
Pre-tax profits were 40% lower at £132m.
The profit figure was pushed down by costs related to restructuring store management teams and preparing for the Asda deal, which is being examined by competition authorities. Like-for-like sales growth for the period – which strips out the impact of new retail space – was 0.6%, which disappointed analysts.
Sainsbury’s chief executive Mike Coupe said the grocery market was “extremely competitive”.
He commented: “It’s a pleasing set of results against a difficult market backdrop, largely driven by the acquisition synergies from the Argos business. Sales of food and general merchandise were boosted by the hot summer, but general merchandise margins remain under pressure.”
Sainsbury’s shares – up more than 30% this year – rose 1.2% in early deals.