FEELING THE PINCH

Gro­cer re­veals sales growth slow­ing

Yorkshire Post - - BUSINESS - ROS SNOWDON CITY EDI­TOR Email: ros.snowdon@ypn.co.uk Twit­ter: @RosSnow­donYPN

Sains­bury’s suf­fers an­other drop in prof­its as it sees sales growth slow­ing

SAINS­BURY’S HAS re­ported slow­ing sales growth and a 9 per cent fall in half year prof­its af­ter moves to keep prices low amid fierce com­pe­ti­tion in the mar­ket.

The fourth con­sec­u­tive de­cline in prof­its also re­flects the in­clu­sion of sea­sonal losses from Ar­gos in the re­sults.

The group re­ported un­der­ly­ing pre-tax prof­its of £251m in the six months to Septem­ber 23.

Fall­ing sales across gen­eral mer­chan­dise and Ar­gos meant like-for-like sales rose just 0.6 per cent in the sec­ond quar­ter, down from growth of 2.3 per cent in the first three months.

To­tal gen­eral mer­chan­dise sales fell 1.6 per cent in the sec­ond quar­ter and to­tal gro­cery sales growth more than halved to 1.4 per cent from 3 per cent in the first quar­ter.

Cloth­ing sales were the bright spot, with a 6.3 per cent in­crease and on­line gro­cery sales rose 7 per cent.

Chief ex­ec­u­tive Mike Coupe said the mar­ket re­mains com­pet­i­tive, but added the group is see­ing clear re­sults of its three-year plan. “We have de­liv­ered a good per­for­mance across the group in the last six months, with more cus­tomers choos­ing to shop at Sains­bury’s in the first half than ever be­fore,” he said.

“We are now three years into de­liv­er­ing our dif­fer­en­ti­ated strat­egy and are see­ing clear re­sults.”

He added that the com­pany is on track for full-year profit ex­pec­ta­tions of £572m, which would mark a 2 per cent fall on last year’s re­sults.

Sains­bury‘s bought Ar­gos in Septem­ber 2016.

Laith Kha­laf, se­nior an­a­lyst at Har­g­reaves Lans­down, said Sains­bury’s was fac­ing in­dus­try­wide head­winds.

“Con­sumer spend­ing is un­der pres­sure from higher in­fla­tion, while it’s cost­ing su­per­mar­kets more to fill their shelves with stock,” he said.

Mr Coupe said non-food sales were knocked by the clo­sure of 100 Ar­gos in Home­base stores fol­low­ing the DIY chain’s takeover by Bun­nings.

But he also blamed “soggy” Au­gust weather for tougher trad­ing, say­ing the end of the sum­mer was a “wipe-out”.

Sains­bury’s is putting faith in a Christ­mas line-up of prod­ucts, in­clud­ing a star-dusted snow globe sand­wich and its award­win­ning cham­pagne, plus the roll-out of 165 Ar­gos stores within su­per­mar­kets to help drive a solid festive sea­son.

Mr Coupe said that while shop­pers are “very cost-con­scious at the mo­ment”, they are ex­pected to “put their hands in their pock­ets and have a great Christ­mas”.

The fig­ures come a month af­ter Sains­bury’s an­nounced 2,000 jobs will go, mainly from hu­man re­sources and pay­roll staff, adding to 1,000 head of­fice job cuts in Au­gust, as part of ef­forts to cut an­other £500 m in costs over the next few years.

All the big su­per­mar­kets have an­nounced job cuts as they look to com­pete with the dis­coun­ters Aldi and Lidl.

We are now three years into de­liv­er­ing our dif­fer­en­ti­ated strat­egy. Mike Coupe, chief ex­ec­u­tive of Sains­bury’s

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