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Sainsbury's shares slide on profits miss

Published: 08:58 04 May 2016 BST

Picture of Mike Coupe
Market will remain a challenge said Coupe

Supermarket giant Sainsbury’s (LON:SBRY) blamed fierce competition on the high street for lower annual profits.

“Ongoing pricing pressures and food price deflation have impacted our sales and operating margins.

“As a result, underlying profit and earnings per share are down this year versus last year,” said Mike Coupe, chief executive.

Underlying profits dropped by 14% to £587mln as sales slipped by 1.1% to £25.8bn. Like-for-like sales were 0.9% lower.

The results were well below analysts’ forecasts and shares fell 3% to 276.7p.

Analysts had been expecting underlying profits of around £613mln on £23.5bn of revenue.

Sainsbury’s like its other big four rivals has been squeezed by the rapid growth of no-frills rivals such as Aldi and Lidl at the bottom of its price range and upmarket competitors such as Waitrose at the top end.

Coupe said that the market was likely to remain competitive for the foreseeable future, but added it knew what its customers wanted better than anyone else.

There was little comment about the £1.4bn Home Retail acquisition even though its main business Argos reported a 36% fall in  profits just a week ago.

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