Sainsbury’s profits fall £45m despite sales growth

Sainsbury’s has seen its profits slide by £45m against a backdrop of sales growth, according to new figures.

The supermarket giant’s pre-tax profit for 2016-17 fell year on year by 8.2% to £503m, down from £548m the year previous.

Groupwide revenues, excluding VAT but including fuel sales, rose from £23.5bn in 2015-16 to £26.2bn, an increase of 11.6%.

J Sainsbury plc’s group chief exec, Mike Coupe, said the last 12 months have formed a “pivotal year” for the supermarket chain.

He commented: “Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price.

“We are also investing in growth areas of the business to meet the changing ways that customers shop.”

Mr Coupe added: “Sainsbury’s design-led General Merchandise and Clothing both outperformed the market and we saw strong growth in Sainsbury’s Groceries Online and Convenience channels.”

Speaking further, the Sainsbury’s CEO said the firm is “pleased with the progress made” since it acquired retailer Argos.

Mr Coupe said the company has since launched 59 Argos Digital stores in Sainsbury’s supermarkets and added that “they are performing well”.

Argos Digital stores that have been open for a year or more are delivering 20% to 30% like-for-like sales growth.

Additionally, Sainsbury’s reported an uplift in sales of between 1% and 2% in its supermarkets containing an Argos Digital store.

Mr Coupe continued: “We are therefore accelerating our plan to open a total of 250 Argos Digital stores in Sainsbury’s supermarkets and will deliver our £160m EBITDA synergy target by March 2019, six months ahead of schedule.”

J Sainsbury plc also reported that it is on track to deliver its three-year, £500m cost-saving programme by the end of 2017/18.

It now plans to deliver a further £500m in cost savings over the three years from 2018/19.