Sainsbury's reveals 13.8% profits dip
Supermarket giant Sainsbury's posted a 13.8% 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 has 13 stores in Northern Ireland - posted underlying pre-tax profits of £587m for the year to March 12, down from £681m a year earlier.
Just last month Sainsbury's won a four-month takeover tussle to snap up Argos owner Home Retail for £1.4bn.
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.
It said like-for-like sales fell for the second year running - down 0.9% - but cheered recent actions to make everyday prices lower for helping drive a turnaround in the fourth quarter.
The group posted a 0.1% rise in like-for-like retail sales excluding fuel for the final quarter - its first quarterly same-store sales growth for more than two years in March.
Mike Coupe, chief executive of Sainsbury's, 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 Mr 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 - a £6bn giant, with around 2,000 stores, concessions and click-and-collect outlets.
The deal is set to complete in the third quarter of 2016.
Statutory profits came after the supermarket was hit the year before by a one-off write-down of £628m on the value of its property estate.
But when stripping out exceptional items, underlying profits have now seen double-digit falls for two years in a row.
The big supermarket chains have struggled amid the threat from discounters such as Lidl in recent years.
The group is also focusing on making regular prices lower on key products, announcing in February it would end multi-buy and buy-one-get-one-free promotions, while it also recently called time on its Brand Match pricing strategy.
It is likewise stepping up its online business, announcing on Tuesday plans to double the number of stores offering a "drive thru" click and collect option for groceries.