- Underlying profit before tax dropped 1% to £581m in the 12 months to March 11
- On a statutory basis, pre-tax profits fell 8.2% to £502m
- The grocer’s like-for-like sales slipped 0.6%
- Group sales rose 12.7% to £29.1bn, mainly as a result of Argos contribution
Sainsbury’s full-year profits slipped, with bumper festive sales at Argos propping up its core food business.
Underlying profit before tax dropped 1% to £581m in the twelve months to March 11, which Sainsbury’s said reflects investment in the customer offer and cost inflation.
The cost of sourcing goods internationally has risen across the piste after the pound slumped as a result of the Brexit vote.
The grocer said these rising costs were offset by cost savings of £130m and a £77m contribution from newly acquired Argos, which makes a large amount of its earnings in the second half of the year, including Christmas.
On a statutory basis, pre-tax profits fell 8.2% to £502m.
The grocer’s like-for-like sales slipped 0.6%, while group sales rose 12.7% to £29.1bn mainly, it said, as a result of the Argos contribution.
Sainsbury’s chief executive Mike Coupe described the year as “pivotal”.
On its core food business, he said: “Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price.”
Sainsbury’s has faced increasing competition from resurgent rivals, including Morrisons and Tesco. The formerly underperforming supermarkets have made significant progress under new management, taking the grocery price war up another notch.
Coupe said the group’s general merchandise and clothing divisions both outperformed the market, with “strong growth” in online groceries, up 8%, and convenience channels, up 6%.
Since acquiring Argos last year, the grocer has rolled out concessions at pace, and unveiled plans for further Habitat shop-in-shops.
Coupe said he is pleased with progress at its 59 existing Argos shop-in-shops and said the division will deliver its £160m EBITDA synergy target six months early.
He has also ramped up plans for in-store Argos concessions, with ambitions to open a total of 250 Argos digital stores in Sainsbury’s supermarkets.
Last month, the grocer struck up a partnership with upmarket bakery Patisserie Valerie and made a lunge for the healthy athleisure market.
What’s on the menu?
Looking ahead, Coupe said the market remains competitive and the impact of cost price pressures remains uncertain.
“However, we are well placed to navigate the external environment and we remain focused on delivering our strategy,” he added.
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