• STV
  • MySTV

Sainsbury's profits fall 9% and sales growth slows

The supermarket giant has blamed inflation and devaluation of sterling following the Brexit vote.

The supermarket blamed inflation and a fall in the value of sterling.
The supermarket blamed inflation and a fall in the value of sterling. PA

Sainsbury's has revealed a nine percent fall in half-year profits and a sharp slowdown in sales growth amid fierce competition in the market.

However, the supermarket giant posted a 0.6% rise in like-for-like sales over the second quarter, down from 2.3% in the previous three months, as trading was dragged lower by falling Argos and general merchandise sales.

Shares fell 3% as the group warned of a "challenging" general merchandise market and also revealed sales slowing across its core grocery arm.

It reported underlying pre-tax profits of £251 million for the six months to September 23, against £277 million a year earlier.

Profits were pushed lower by seasonal losses from Argos, as previously flagged by the chain, as well as efforts to keep prices low in the face of inflation and cost pressures.

Chief executive Mike Coupe blamed inflation and the devaluation of sterling following the Brexit vote, for the fall in profits due to the supermarket's attempts to absorb the costs rather than pass them on to customers.

He continued that he expected inflation to lessen in the coming months, benefiting the company's profits.

Mr Coupe added that the market remained "competitive", but insisted the group was seeing "clear results" from its three-year plan.

He added that the company was on track for full-year profit expectations of £572 million, which would mark a 2% fall on the previous year's result.

Retail experts raised concerns over the sales slowdown.

Laith Khalaf, a senior analyst at Hargreaves Lansdown, said Sainsbury's was facing "industry-wide headwinds".

"Consumer spending is under pressure from higher inflation, while it's costing supermarkets more to fill their shelves with stock," he said.

Sainsbury's total general merchandise sales growth dropped to 1.6% in the second quarter, while total grocery sales growth more than halved to 1.4% from 3% in the first quarter.

Clothing sales were the bright spot, with a 6.3% hike, while online grocery sales lifted by 7%.

Mr Coupe said non-food sales were knocked by the closure of 100 Argos in Homebase stores following the DIY chain's takeover by Bunnings.

But he also blamed "soggy" August weather for tougher trading, saying the end of the summer was a "wipe-out".

The UK's second biggest grocery chain hoped that Christmas would boost profits.

Mr Coupe said that while shoppers are "very cost-conscious at the moment", they are expected to "put their hands in their pockets and have a great Christmas".

The figures come just a month after Sainsbury's announced 2,000 job cuts, mainly from human resources and payroll staff as part of efforts to save another £500 million in costs over the next few years.

All the big supermarkets have announced job cuts in recent months as they look to compete with the German discounters Aldi and Lidl, as well as surging cost pressures.

Sainsbury's is hoping its £1.4 billion takeover of Argos owner Home Retail Group last year will help give it the edge in a tough market.

It has already added 112 Argos stores within supermarkets, with another 53 due to open by Christmas, while rolling out click and collect nationwide for the chain.

And in grocery, it has added 70 new food lines in a bid to win over shoppers.

One account. All of STV.

This field is required. That doesn't look like a valid e-mail format, please check. That e-mail's already in our system. Please try again.
ShowHide
Forgot password?
This field is required. At least 6 characters please. Did you enter your details correctly?
If you've forgotten your details then use the 'Forgot password?' link.
Need to reset your password?

We'll send a link to reset your password to

We've sent you details on how to reset your password

Please check your email and follow the instructions.

Forgotten your email address?

Have you forgotten the email address that you previously joined with? Don't worry, by emailing enquiries@stv.tv we can help.

One account. All of STV.

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
At least 6 characters please
ShowHide
This field is required. At least 6 characters please.
You have to be 16 or over to join
This field is required. This doesn't appear to be a valid date
Type your full postcode and select your address This field is required. It doesn't look like you've entered a valid postcode. Can't find your address? Confirm the details you've given us are correct by clicking here

By continuing you agree to our Terms of Use, including our Privacy Policy and Cookie Policy. Any issues contact us.

Upload Profile Picture

Please make sure your image is under 2mb in size and a valid JPG, PNG or GIF.

Are you sure?

Unfortunately, you'll be unable to access our premium content. We’ll be sorry to see you go, but if you change your mind you can rejoin us at any time.

Please verify your STV account

Please verify your STV account using the email we sent you. If you have lost the email, we can send you another one, just click the button below.

Thanks

We've sent you a new verification email.
Please check your email and follow the instructions to verify your account.

Welcome to STV
Thanks for joining us.

Oops!

Sorry, you must be at least 12 years old to place a vote for your Real Hero.

Please review our Voting Terms of Use for more information.

Oops!

Sorry! It seems that you are using a browser that is incompatible with our voting service.

To register your vote please copy the below URL in to your regular mobile browser. We recommend Google Chrome, or Safari.

http://shows.stv.tv/real-heroes/voting

Oops!

Sorry, you seem to have already voted in this category.

Thanks for voting

Now share your vote with friends on your social network

Share on twitter Share on facebook

Cast your vote

Please register or sign in to continue.

Cast your vote

This field is required. This doesn't appear to be a valid date

Cast your vote

Please fill out this form to cast your vote. As you are under 16 years old you will not create an STV account. Why do we need these details?

This field is required. Please enter at least 2 characters
This field is required. Please enter at least 2 characters
This field is required. That doesn't look like a valid e-mail format, please check.
Location This field is required.
Parental Consent This field is required.

That's you. All that's left is to click the 'Submit Vote' button below. By doing so, you confirm that you and your parent or guardian have read and accept our Voting Terms of Use, Privacy Policy and Cookie policy, and that the details you have entered are correct. We'll look after them as carefully as if they were our own.