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Sainsbury's set to reveal lower profits after 'eventful' year

Published 03/05/2016

Sainsbury's is set to reveal lower profits after an eventful year
Sainsbury's is set to reveal lower profits after an eventful year

Sainsbury's is set to reveal lower profits tomorrow after an eventful year that has seen the group return to sales growth and win a lengthy battle to take over Argos owner Home Retail Group.

The Big Four grocer won a four-month takeover tussle in early April to snap up Home Retail for £1.4 billion - a move the group said will create the UK's largest non-food store - a £6 billion giant, with around 2,000 stores, concessions and click-and-collect outlets.

It is a daring move for Sainsbury's chief executive Mike Coupe, who took over from predecessor Justin King in July 2014.

Mr Coupe hopes the deal will help the chain against the mounting threat from online retailer Amazon and German rivals Aldi and Lidl.

He will be looked to for further details on how he plans to overhaul Argos when he reports full-year figures.

The results will show the impact of another tough year for the supermarket sector, with analysts pencilling in a 16% fall in underlying profits to £574 million.

But Mr Coupe has made recent inroads into shoring up trading, with the group posting its first quarterly like-for-like sales growth for more than two years in March.

It said like-for-like retail sales excluding fuel lifted by 0.1% in the fourth quarter, compared with a fall of 0.4% in the third quarter.

The most recent industry data also shows Sainsbury's to have notched up the highest sales growth of the Big Four.

Figures from Kantar Worldpanel showed 1.2% sales growth for the chain in the 12 weeks to March 27, despite its decision in February to end multi-buy and buy-one-get-one-free promotions.

The group also recently said it would end its Brand Match pricing strategy in favour of lower regular prices on key products.

Sainsbury's is likewise stepping up its online business by doubling the number of stores offering a "drive thru" click and collect option for groceries.

The service - which allows customers to order online before picking up their shopping from refrigerated vans in the supermarket car park - will increase from 100 to 200 stores within the next 12 months.

It said the click and collect grocery vans are manned by Sainsbury's staff so customers do not need to leave their cars when picking up their shopping.

But analysts at Barclays said they will be looking for comments in the full-year results about the cost of recent price moves.

They said: "The company has repeatedly stated its determination to remain competitive on price in the market - and any sense of how expensive this may prove will be crucial."

Morrisons will also provide its latest snapshot of trading when it updates on Thursday.

The Bradford-based group is likewise seeing a resurgent performance, revealing in March that it bounced back into profit after posting its first quarterly sales growth for four years.

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