Sainsbury’s today posted a 13.8 per cent fall in underlying annual profits as it remained under pressure amid a supermarket price war and said there was little sign of an end to tough conditions.
The UK’s second-biggest supermarket – which recently won a four-month takeover tussle to buy Argos owner Home Retail Group for £1.4 billion – posted underlying pre-tax profits of £587 million for the year to 12 March, down from £681m a year earlier.
But on a bottom-line basis, it swung out of the red with pre-tax profits of £548m against losses of £72m the previous year, which had marked the company’s first loss in a decade.
Saisnbury’s said like-for-like sales fell for the second year running – down 0.9 per cent – but cheered recent actions to make everyday prices lower for helping drive a turnaround in the fourth quarter.
The group posted a 0.1 per cent rise in like-for-like retail sales excluding fuel for the final three months of its financial year – its first quarterly same-store sales growth for more than two years.
Chief executive Mike Coupe said: “Ongoing pricing pressures and food price deflation have impacted our sales and operating margins.”
He added: “The market is competitive, and it will remain so for the foreseeable future.”
But he said the recent improvements in sales shows “customers are responding positively to our offer”.
Sainsbury’s has slashed prices on more than 1,900 products under an overhaul launched by Coupe in November 2014 and the group pledged to keep cutting prices to remain competitive.
Its full-year results come just a month after Sainsbury’s agreed the Home Retail takeover – a move the group said will create the UK’s largest non-food store with about 2,000 stores, concessions and click-and-collect outlets. The deal is set to complete in the third quarter of 2016.