First annual loss for 10 years in UK; Sainsbury’s reports
The UK’s third-largest supermarket chain reported a £72m loss in the year to 14 March. The results were hit by a number of one-off costs, including a writedown in the value of some of its stores. Excluding the one-off costs, underlying pre-tax profits fell 14.7% to £681m, compared with £798m the year before. Underlying group sales fell 0.9% to £26.1bn, while like-for-like sales – which strip out new store space – fell 1.9% as the chain faced competition from discount chains such as Lidl and Aldi. Sainsbury’s share price fell 1.3% in early morning trading.
These are the first full-year results that chief executive Mike Coupe has presented since he took over from Justin King last year. In the results statement, Mr Coupe said: “The UK marketplace is changing faster than at any time in the past 30 years which has impacted our profits, like-for-like sales and market share.” “However, we are making good progress with our strategy, and our investment in price and quality is showing encouraging early signs of volume and transaction growth.” The combination of falling fuel prices and cheaper goods generally for shoppers has had an impact on supermarkets, Mr Coupe told the Today programme “With customers having more money in their pocket, they tend to eat out rather than eating in so that has a drag on the supermarket industry.” Last month, the UK’s largest supermarket, Tesco, reported an annual loss of £6.4bn. Much of the loss was down to a decline in the value of its property portfolio.
The supermarket sector in general is suffering because of increased competition from cheaper stores, which has triggered a price war between the big chains. Sainsbury’s said in November that it would spend £150m on cutting prices in its stores. While competition for food sales remains fierce, Sainsbury’s said its non-food business was doing well. Sales of general merchandise grew by more than 7%, with clothing sales up nearly 12%.