Sainsbury's warns of 'challenges' after 8.2% profits slump
Supermarket Sainsbury's, which has 12 stores in Northern Ireland, has cautioned over "challenging" trading and ongoing price pressures as it posted an 8.2% fall in annual profits.
The chain, which recently revamped its store in Belfast's Forestside shopping centre, reported pre-tax profits of £503m for the year to March 11, down from £548m the previous year.
Profits fell 1% on an underlying basis to £581m as it sought to keep prices low amid cost pressures from the Brexit-hit pound, which offset a £77m boost from the recently-bought Argos chain.
The group said the market remains "competitive and the impact of cost price pressures remains uncertain", with like-for-like supermarket sales down 0.6% over the year.
Sainsbury's said it had spent £2.5m on revamping its Forestside store, including opening an Argos digital store in its former off-licence in the shopping centre.
Chief executive Mike Coupe said its food business remained "resilient in a challenging market".
He added: "This has been a pivotal year and we have made significant progress delivering and accelerating our strategy."
The company has a 17.3% share in the Northern Ireland grocery market, according to recent figures from Kantar Worldpanel.
Group sales, including Vat, surged 12.7% thanks to a robust contribution over the final six months from the Argos business, which the group bought when it acquired Home Retail for £1.4bn last year.
Sainsbury's said it made cost savings of £130m as part of a three-year target to cut £500m by the end of 2017/18. It also aims to slash costs by another £500m in the next three years.
Mr Coupe said the group was "pleased" with its progress so far since snapping up Argos, having already opened 59 Argos Digital stores in its supermarkets, which it said were performing well.
It is also ramping up plans to open 250 Argos Digital stores, the group added.
The figures mark the third year of falling underlying annual profits for Sainsbury's and show that, while convenience store sales were up 6% and online groceries lifted 8%, the group's supermarkets saw a decline of 2%.
The group warned that it expects cost price inflation of 2% to 3% over the financial year ahead and said rising prices were set to hit sales of general merchandise and clothing sales.
It also said that it expects underlying profit over the first half of the current year to be hit by rising costs.