Sainsbury’s warns over ‘con­sumer un­cer­tainty’

Western Daily Press - - Business - HOLLY WIL­LIAMS PA deputy City edi­tor

SAINSBURY’S has added to fears over lack­lus­tre con­sumer spend­ing in the run-up to Christ­mas, as it warned over an un­cer­tain out­look amid “un­prece­dented times”.

The su­per­mar­ket gi­ant set the scene for a more dif­fi­cult fes­tive trad­ing pe­riod as signs point to con­sumer re­trench­ment in the face of Brexit wor­ries.

An­nounc­ing half-year results, Sainsbury’s said: “The con­sumer out­look is un­cer­tain as we head into our key trad­ing pe­riod.”

The chain added that its mar­kets also con­tin­ued to be “highly com­pet­i­tive and very pro­mo­tional”.

The com­ments came as Sainsbury’s re­ported a 40 per cent slump in bot­tom-line prof­its to £132 mil­lion for the six months to Septem­ber 22 af­ter a raft of costs, in­clud­ing store re­struc­tur­ing and ex­penses re­lated to its planned £12 bil­lion merger with Big Four ri­val Asda.

But on an un­der­ly­ing ba­sis, pre­tax prof­its rose 20 per cent to £302 mil­lion.

Sainsbury’s boss, Mike Coupe, said the group was fac­ing “un­prece­dented times” as the coun­try was left wait­ing for news of a Brexit deal with less than six months to go un­til the March 29 with­drawal date.

The lat­est re­port from the Bri­tish Re­tail Con­sor­tium ear­lier this week also re­vealed like-for-like re­tail sales edged just 0.1 per cent higher in Oc­to­ber, with the “all-im­por­tant golden quar­ter” get­ting off to a fairly flat start.

The BRC said con­sumer cau­tion was among fac­tors seen damp­en­ing de­mand.

Mr Coupe said: “We have to strike a note of cau­tion be­cause we are in un­prece­dented times in my ex­pe­ri­ence.”

But he said the group was not brac­ing it­self for a wash-out fes­tive sea­son.

“Con­sumers will trade up and they tend to come to Sainsbury’s more,” he said.

De­spite the cau­tion, Sainsbury’s said it re­mained on track for full-year ex­pec­ta­tions, with an­a­lysts pen­cilling in un­der­ly­ing pre-tax prof­its of £634 mil­lion, up from £589 mil­lion in 2017-18.

Mr Coupe ad­mit­ted the group had seen “bumpy” stock avail­abil­ity in its stores over the early sum­mer pe­riod af­ter con­tro­ver­sial re­cent pay and con­tract changes for its 135,000 store staff and man­agers.

He said: “Par­tic­u­larly dur­ing the warm weather, avail­abil­ity was a chal­lenge be­cause peo­ple were buy­ing cer­tain items.”

He in­sisted avail­abil­ity had re­turned to nor­mal lev­els and added that the chain was “very con­fi­dent of our stan­dards”.

He said the group con­tin­ued to “en­gage con­struc­tively” with the com­pe­ti­tion watch­dog amid an in­depth probe of its planned tie-up with Asda.

The Com­pe­ti­tion and Mar­kets Au­thor­ity said in Septem­ber that nearly 500 of the duo’s su­per­mar­kets over­lapped, fol­low­ing ini­tial in­ves­ti­ga­tions into the merger.

It is con­sid­er­ing whether the deal could lead to less choice, higher prices or worse quality ser­vices.

Mr Coupe said: “We re­main con­fi­dent in the case we are mak­ing to the CMA. It will re­sult in lower prices for con­sumers.”

Sainsbury’s saw the sum­mer heat­wave boost sales over its sec­ond quar­ter, with like-for-like growth in­clud­ing Ar­gos, but ex­clud­ing fuel, ac­cel­er­at­ing to one per cent, up from 0.2 per cent in the pre­vi­ous three months. This meant com­pa­ra­ble store sales rose 0.6 per cent over­all in the half-year.

Sainsbury’s saw a 40 per cent fall in bot­tom-line prof­its

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