Price reductions and clearing surplus stock both hit the bottom line
Sainsbury's has managed to improve on sales over the past half year, but profits have taken a huge hit. The grocer's total supermarket sales for the 28 weeks ending on October 9, not including Sainsbury's Bank, were£8.35 billion, up 3.5 per cent on last year. Like-for-like sales shrank marginally by 0.9 per cent, excluding petrol.

However, underlying profit before tax fell by a staggering 64.2 per cent to£131 million. The retailer blamed the reduction on price cuts, which it made to stay competitive with rivals. In the same period, Philip Hampton was appointed as chairman and£639 million was returned to shareholders.

Despite the level sales figures, the retailer was optimistic for the future. It forecast a£2.5 billion growth in sales figures over the next three years. Chief executive Justin King said: 'We are beginning the implementation of the plans arising from the Business Review to rebuild a sustainable sales-led recovery. We have re-opened the Buntingford depot to help improve availability, and deliveries from this location start next week. New, improved products are being added to our ranges and many of our Christmas lines are now in stores. The recruitment of 3,000 additional colleagues is also well under way.'