Store shake-up dents half-year profits

SAINSBURY’S is on a mission to slash costs by £500million after its balance sheet suffered a £203m hit on the back of store closures.

Pre-tax profits fell to £9m in the six months to September 21, down from £107m during the same period in 2018.

Sainsbury’s, which owns Argos, announced a store shake-up in September that will see 60 to 70 Argos shops shut and around 80 open within Sainsbury’s supermarkets, while 10 to 15 supermarkets will also close.

New accountancy rules around how property values can be added to balance sheets accounted for the one-off £203m deficit.

Sales during the six months to September 21 were flat at £15.1billion.

Like-for-like sales, excluding fuel, were down 1%, food sales slid 0.1%, merchandise sales fell 2.5% and clothing dipped 1.2%.

But the grocer insisted its plans were on track with improvements to pricing and product ranges.

Chief executive Mike Coupe welcomed the results, pointing out that his strategy to reduce prices and improve availability was working.

He said: “We are investing in hundreds of Sainsbury’s and Argos stores, introducing new products and services. As a result, customer satisfaction has increased significantly year on year.”

Sophie Lund-yates, equity analyst at investment firm Hargreaves Lansdown, said: “The supermarket landscape has become more competitive and Sainsbury’s is fighting to keep sales moving in the right direction. “We’ve had good news from Marks & Spencer’s food business this week, and its deal with Ocado will just add more pressure into the mix.

“It begs the question; what can Sainsbury’s do to differentiate itself?”

CUTBACKS £500m to be slashed