Sainsbury's Slumps To £72m Loss As Sales Fall
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Loading... - J. OLIVEIRA
- 06 May 2020
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Sainsbury's has slumped to an annual loss for the first time in a decade amid the intense supermarket price war that has seen shoppers march to hard discounters.
The chain blamed the bulk of its pre-tax loss of £72m on a £753m charge it booked in its half-year results in November, mostly related to writedowns on store values.
However, trading continued to be hit with like-for-like sales falling 1.9% over the 52 weeks to 14 March.
Underlying profits, which reflect day-to-day trading, fell almost 15% to £681m.
Chief executive Mike Coupe said Sainsbury's was making good progress with its strategy, with investment in price and quality showing encouraging early signs of growth.
The chain said it had "never been more competitive on price versus our competition".
Mr Coupe added: "The UK marketplace is changing faster than at any time in the past 30 years which has impacted our profits, like-for-like sales and market share.
“We know that our customers still want the best quality food at great prices and our strategy is built on our strong foundations of selling great food with a focus on quality, provenance and sustainability.
"At the same time, we know that our customers want value for money and we have therefore invested in lowering our prices; our prices versus our competitors have never been better."
Sainsbury's, along with rivals Tesco (Xetra: 852647 - news) , Asda and Morrisons, is grappling with food price deflation alongside the intensifying price war, launched to stem the flow of shoppers to discounters Aldi and Lidl.
All are also having to adapt as consumers shop more frequently and locally, and buy more online.
Sainsbury's said it expected its like-for-like sales to remain negative in 2015/16, citing competition and falling prices.
Industry figures by Kantar Worldpanel, also released on Wednesday, showed grocery inflation running at a new record low annual rate of 2.1%, saving the average household £20 over the past three months.
Kantar's latest market share figures supported Sainsbury's suggestion that its trading was starting to pick up.
The statistics showed it was the "strongest performer" among the 'big four' chains, the data firm said, despite sales falling 0.2% in the 12 weeks to 26 April.
Waitrose was the only major mainstream chain to grow sales in the period while the discounters continued to add fat.
The squeeze in the middle ground has forced chains to cut costs to help them compete.
Sainsbury's has previously announced hundreds of job losses and a growth in concession offerings, notably Argos Digital stores, to bolster the customer shopping experience at major stores.
The full-year results were the first under Mr Coupe since he succeeded Justin King, who stepped down last year.
It emerged last month that Mr Coupe risked being jailed if he set foot in Egypt amid a legal case relating to the chain's failed foray into the Egyptian market.
