Accountants grow with third office
SAINSBURY’S HAS incurred £17m of transaction costs in relation to its proposed £12bn merger with Asda as it warned of an uncertain consumer outlook ahead of Christmas.
The group’s chief executive Mike Coupe said the market remains very competitive and the firm is transforming the business to meet rapidly changing customer needs.
“Our proposed combination with Asda will create a dynamic new player in UK retail, with the ability to further lower prices and to reduce the cost of living for millions of UK households,” he said.
“The Competition and Markets Authority is conducting its indepth Phase Two review into the proposed combination and we continue to engage constructively with the CMA and Panel.”
Sainsbury’s reported a 20 per cent rise in half-year profits.
The grocer said underlying pre-tax profits rose to £302m in the six months to September 22, up from £251m a year earlier.
On a statutory basis, pre-tax profits fell 40 per cent to £132m.
Sainsbury’s said the summer heatwave boosted sales over its second quarter, with like-for-like growth including Argos rising 1 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.
The group warned the consumer outlook is “uncertain as we head into our key trading period” and said markets remain “highly competitive and very promotional”.
Despite this, Sainsbury’s said it remains on track for full-year expectations, with analysts pencilling in underlying pre-tax profits of £634m.
The firm’s interim figures showed grocery sales rose 1.2 per cent in the first half thanks to the hot summer, while overall general merchandise sales rose 1.5 per cent, although non-food profit margins remain under pressure.
Clothing sales fell 1 per cent in the first half due to changes in promotions.
Mr Coupe said: “We have to strike a note of caution, because we are in unprecedented times in my experience.
“We always have a bit of nervous energy as we go into the Christmas trading period.
“Consumers will trade up and they tend to come to Sainsbury’s more.”
On the impact of controversial recent pay and contract changes for its 135,000 store staff and managers, Mr Coupe admitted the group had seen “bumpy” stock availability in its stores over the early summer period.
He said: “Our standards are as good as they have ever been.
“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”.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Argos is proving to be an ace up the sleeve for Sainsbury’s in a tough retail environment.
“The World Cup and barbecue weather over the summer provided a welcome shot in the arm for the supermarket, though without this seasonal stimulus sales growth from existing outlets wouldn’t look great.”
He said that the big gamechanger for Sainsbury’s is the proposed merger with Asda.
A Yorkshire accountancy firm has opened a third office as part of its expansion plans.
DSC Accountants’ new office in Skipton will serve the Bradford and Craven areas, and will be led by Janet Corbridge, who joined DSC in 2011 after training in the audit department at KPMG in Leeds. DSC has been a fixture of Yorkshire’s professional services sector for more than 50 years. It was founded in Harrogate in the 1960s and opened its second office in Leeds in 2016.