Store closure costs take heavy toll on the retailer’s first-half results.
Profits at Sainsbury’s have declined dramatically over the first half of the year, after being impacted by costs relating to store closures. In September, Sainsbury’s announced that it would close a number of stores, including numerous Argos outlets as it moves the brand into its supermarkets. The plan to close 125 stores and replace these with 110 convenience stores, as well as inserting 80 Argos outlets into larger stores, is expected to ultimately cost up to £270m, but lead to savings of £500m over the next five years.
The store closures resulted in a £203m charge in Sainsbury’s half-year results, which cover the 28 weeks to 21st September. As a result, pre-tax profits dropped from £107m in the same period last year to £9m, while Sainsbury’s also announced a 1% drop in like-for-like sales. Like-for-like general merchandise sales fell by 2.5%
Stripping out the cost of the store closures, underlying pre-tax profit reached £238m, down from £279m in the same period last year.
Commenting on the results, Sainsbury’s said: “Retail markets remain highly competitive and the consumer outlook remains uncertain.”