THE RETAIL BULLETIN - The home of retail news
Department Stores
Shopping Centres & Retail Parks
Home & DIY
Health & Beauty
General Merchandise
Sports & Leisure
The Papers
Retail Solutions
Food & Drink
Sainsbury's reports 6.3% drop in profits

SainsburyÂ’s has posted a 6.3% drop in its underlying pre-tax profit in the first half of its financial year as it warned that it expects like-for-like sales to fall "for the next few years".


Sainsbury's reports 6.3% drop in profits

SainsburyÂ’s has posted a 6.3% drop in its underlying pre-tax profit in the first half of its financial year as it warned that it expects like-for-like sales to fall "for the next few years".

In the 28 weeks to 27 September, underlying pre-tax declined to £375 million from £400 million in the same period in the previous year.

Meanwhile, retail sales excluding fuel were flat while like-for-like sales fell by 2.1%.

Underlying group sales edged down 0.3% in the period to £13.9 billion.

In a statement, the retailer said the grocery sector was undergoing structural change as customers shop more frequently, and use online, convenience and discount channels more. As a result, it expects supermarket like-for-like sales in the sector to be negative for the next few years.

Mike Coupe, Sainsbury’s chief executive, said: “Our strategy is evolving to address the continuing shifts in customer shopping patterns which we believe will lead to a greater emphasis on product quality and ease of shopping, and an increase in multi-channel shopping.

“We will continue to differentiate ourselves from a position of strength by offering great products and services at fair prices, investing in the quality of our food and investing in price in areas where our customers tell us it matters most. By knowing our customers better than anyone else we will continue to serve them through multiple channels and in ways that make their lives easier, regardless of changes in the market” 

Sainsbury’s is planning to invest an additional £150 million in price, of which approximately half will fall in the second half of 2014/15 and the remainder in the first half of 2015/16. It will also continue to grow its non-food business with a focus on design-led clothing, cookware, homewares and seasonal products. 

In addition, the retailer is looking to open 500,000 square feet of space in each of the next two years, followed by 350,000 square feet in 2017/18. This will include eight new supermarkets over that period. Over half of the new space will be convenience stores as the retailer targets the opening 100 convenience stores per year.

However, Sainsbury’s is also planning to deliver total operating cost savings of £500 million over the next three years. This will represent annual operating cost savings in the range of £150 million to £175 million, a step up from recent levels. The retailer will also reduce capital expenditure to between £500 million and £550 million per annum over the next three years.

Following a  review of its supermarket estate, Sainsbury’s said it has concluded that over the next five years, around 25% of its store portfolio will have some under-utilised space which could  be used to expand its non-food offer or for concession partnerships.

Coupe continued: “Sainsbury’s is a great business. Our consistent outperformance of our main supermarket peers over the past five years is evidence of this. We are facing into a once-in-a-generation combination of cyclical and structural change in the industry, but I firmly believe that this strategy, building on our unique heritage and track record of success and delivered by the most experienced management team in retail, will focus and energise our business to the benefit of customers, colleagues and shareholders alike.”

Email this article to a friend

You need to be logged in to use this feature.

Please log in here

Subscribe For Retail News


Customer Engagement Conference 2019
Customer Engagement Conference 2019
5 June 2019
Cavendish Conference Centre, London W1
The 10th Annual Retail Customer Engagement Conference
The HR Summit 2019
The HR Summit 2019
8 October 2019
Hallam Conference Centre, London W1W 6JJ
The 11th HR Summit 2019, Hallam Conference Centre, 44 Hallam St, Marylebone, London W1W 6JJ
AI in Retail Conference 2019
AI in Retail Conference 2019
16 October 2019
Cavendish Conference Center, London W1G 9DT
Digitally native competitors and demanding customers are forcing a new perspective in retail. AI and machine learning can help you step up to the challenges; and some ‘small and beautiful’ solutions can increase your conversion rates within just a few weeks.
Omnichannel Futures Conference 2020
Omnichannel Futures Conference 2020
5 February 2020
Cavendish Conference Centre, London WG1 9DT
A truly omnichannel offering requires an understanding of customer behaviour across all shopping channels and how this should impact your overall business strategy