NEWS

Sainsbury’s half-year profits drop by 18%

Published on: 12th November 2015

The retailer has reported a decline in its half-year profits, due to price reduction investments and a continued pricing war against discount chains.

Sainsburys-480The supermarket’s pre-tax profits for the 28 weeks to 26th September fell 17.9% to £308m. The firm also said that retail sales, excluding fuel, were down 0.1%, with like-for-like sales sliding 1.6%.

Its profits figure, which is down from £375m last year, is its lowest first-half profit since 2010. However, the figure was still ahead of analysts’ predictions of around £293m.

Sales at supermarkets fell by just over 2%, and were driven by food deflation, lower like-for-like volumes and customers shopping across multiple different channels.

However, despite food sales declining by nearly 1%, clothing sales were up by almost 10% and convenience stores showed sales growth of nearly 11%. Research from Kantar Worldpanel also found that the firm was the only major chain to see sales rise in the 12 weeks to 11th October, lifting its market share to 16.1%.

Sainsbury’s chief executive, Mike Coupe, admitted that the grocery retail marketplace remains challenging but said he was confident that the company is making progress.

David Gray, retail analyst at Planet Retail, commented on the retailer’s results: “With food price deflation now entrenched, and discounters growing market share, mainstream operators like Sainsbury’s must face up to the harsh realities – invest in lower prices or lose out to cut-price rivals. With the foundations of a UK food retail margin reset now laid, attention is very much on how retailers intend to rebuild their respective businesses.”

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