Sainsbury's boss sets sights on long-term as profits fall again
- Author: Essie Rivera May 04, 2017,
May 04, 2017, 21:04
So the Kantar cavalry was cantering, not galloping to Sainsbury's rescue after it revealed an 8 per cent fall in annual profits to £503 million in the financial year to 11 March, during which its core like-for-like supermarket sales fell 0.6 per cent.
A boost from Argos helped group sales at the United Kingdom retailer jump 12.7% to £29,112 million, but like-for-likes were down by 0.6% and underlying profit before tax was hit, falling 1% to £581 million, down from £587 million past year.
It said the grocery market remains competitive and the impact of cost price pressures remains uncertain, with like-for-like supermarket sales down 0.6 per cent over the year.
"Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price", Chief Executive Officer Mike Coupe said in the statement.
Sainsbury's was shielded somewhat by its acquisition of the general-merchandise chain Argos a year ago, which initially drew investor scepticism.
Sainsbury's is facing several very big problems: 1) consumers are no longer shopping in big supermarkets; 2) competition from rivals is intense; 3) the economy is on rocky grounds. Citigroup Inc reissued a "neutral" rating and set a GBX 260 ($3.36) target price on shares of J Sainsbury plc in a research report on Friday, January 6th.
As of 08:25 BST, Sainsbury's share price had fallen 2.47 percent to 272.60p, underperforming the broader London market, with the benchmark FTSE 100 index now 0.24 percent worse off at 7,232.40 points.
The news broke earlier this Wednesday that the second largest supermarket Sainsbury was massively losing in the first three months of the year.
Neil Wilson, senior market analyst at ETX Capital noted: "Cross-selling opportunities are harder to quantify but should contribute to sales growth as more Argos stores are integrated with Sainsbury's supermarkets".
However, rising costs have reduced profits this year and Coupe told the BBC that, with rising inflation, it is "difficult to predict" when prices might increase.
Support services company Carillion said on Wednesday that trading conditions have remained largely stable since its full-year 2016 results in March and it has made a promising start to the year.
General merchandise and clothing saw an uplift, highlighting the fact it was food sales that are under pressure.