J Sainsbury PLC (LON:SBRY) said it plans to accelerate investment in its stores and technology in the wake of the blocking of its takeover of Walmart Inc (NYSE:WMT) owned rival Asda as it reported a second straight quarter of underlying sales decline although full-year profit beat forecasts.
Reporting results for the year-ended 9 March 2019, the FTSE 100-listed firm said its underlying pre-tax profit rose by 7.8% to £635mln helped by synergies from the Argos general merchandise business it purchased in 2016.
It added that group total sales for the full-year rose by 2.1% to £32.41mln, but like-for-like sales excluding fuel in the fourth quarter were down 0.9%, having fallen 1.1% over the Christmas period third quarter.
Sainsbury's said it would invest to improve more than 400 of its supermarkets this year, would reduce net debt by at least £600mln over the next three years, and would maintain its dividend policy for a payout covered 2.0 times by underlying earnings.
It is paying a final dividend for 2018/19 of 7.9p per share, bringing its full year payout to 11.0p, an increase of 7.8% on the previous year.
Mike Coupe, the group’s chief executive said: "I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change.”
In afternoon trading, Sainsbury’s share topped the FTSE 100 leader board, up 3.8% at 231p.
In a note to clients, Neil Wilson, chief market analyst at Markets.com commented: “There’s some relief for Sainsbury’s stock as profits were ahead of forecast, but the underlying picture remains a tough one for its core grocery business.
“Having been hit hard by the CMA’s rejection of its planned Asda merger, this is small consolation for Mike Coupe and co. Shares rallied 4% as investors saw the good side of the profits beat, but the LFL sales remain a big trouble spot.”
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