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Sainsbury's statutory interim profits fall 92%

Underlying profit before tax fell 15% due to due to higher marketing costs, worse weather compared to last year and the timing of cost-cutting

J Sainsbury PLC - Argos concessions
Sainsbury's predicts it can reduce costs by £500mln over five years by integrating Argos concessions

J Sainsbury PLC (LON:SBRY) has reported a sharp decline in sales and profits for the first half of the year, as expected.

The FTSE 100-listed retail giant's underlying profit before tax (PBT) of £238mln for the 28 weeks to 21 September was down 15% on the same period last year due to higher marketing costs, “tougher” weather compared to last year and the timing of cost-cutting efforts.

The company expects profits in the second half to have an easier comparison with last year, due to the timing of staff wage increases last year, marketing costs and weather.

Revenue of £16.9bn was down 0.2%, of which retail was 0.6% lower and like-for-like sales fell 1.0% - as had been revealed in a recent second-quarter trading update.

Statutory PBT fell 92% to £9mln on sales down 0.2% as items excluded from underlying results rose to £229mln from £172mln the year before.

The interim dividend was lifted by 6% to 3.3p per share, up 6%, in line with its policy of paying 30% of the prior full-year dividend.

Sainsbury’s last month revealed a strategic plan to close 125 stores and replace these with 110 convenience stores and inserting 80 Argos outlets inside the bigger stores, which should cost up to £270mln but lead to savings of £500mln over the next five years.

Chief executive Mike Coupe hailed the “positive momentum” across the business through investments in the customer offer, lowering prices, launching a range of value brands and investing in stores, with the result of customer satisfaction having “increased significantly”.

On the outlook, he said retail markets remain “highly competitive and the consumer outlook remains uncertain”.

Quick facts: J Sainsbury PLC

Price: 204.8 GBX

LSE:SBRY
Market: LSE
Market Cap: £4.53 billion
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