Sainsbury’s boss issues Christmas warning
Chief executive makes new plea over Asda merger with discounters making inroads into festive market
THE boss of Sainsbury’s has made a fresh appeal to the competition watchdog to approve its £10bn merger with Asda as he warned discounters’ incursions into upmarket food ranges will make Christmas even tougher.
Mike Coupe, the chief executive, stressed Sainsbury’s was competing with Aldi and Lidl on a wider range of products than ever as “a fillet steak has become almost a commodity item”.
Traditionally, shoppers trade up over Christmas to treat friends and family, but the faltering consumer backdrop and better premium food ranges from discounters could buck this trend. “Clearly we have to strike a note of caution as this is an unprecedented time,” Mr Coupe said.
He appealed to the Competition and Markets Authority, which is reviewing the merger plans, to appreciate the pressure wielded by Aldi and Lidl.
The watchdog has already highlighted 463 areas in which competition would be lessened by the Asda merger, which Mr Coupe dismissed as a “fairly blunt” early analysis. The CMA will issue its provisional findings in January, which can be challenged. Mr Coupe said: “Ultimately the CMA tests if there is consumer harm and we think that there is an overriding case this will benefit consumers as the synergies that will be passed on will mean lower prices for consumers”.
Sainsbury’s posted a 40pc drop in pre-tax profits to £132m in the six months to Sept 22 after hefty one-off costs including £69m redundancy and restructuring costs, £25m from its integration of Argos stores and £17m in costs related to the Asda merger.
The supermarket’s total sales rose 3.5pc to £16.8bn over the period, while like-for-like sales, which strip out the impact of new shops, was up 0.6pc.
Sainsbury’s benefited from the hot summer that spurred sales at its convenience stores as shoppers picked up burgers and beer during the World Cup. However, staff cuts had disrupted sales as there were empty shelves.
It is still integrating its takeover of Argos, opening a further 60 shops within supermarkets, taking the total to 251, which is helping to grow general merchandise sales by 1.5pc, ahead of the wider market. It has shut 122 high- street stores since its acquisition.
Julie Palmer, of Begbies Traynor, said: “The purchase of Argos has been a well-crafted tactical decision to draw greater footfall into its stores and reduce cost-saving measures. However, there is still uncertainty around its merger with Asda.”