Sainsburys reports £500m profit hit as customers focus on "essential items"
A UK supermarket has reported that it may see a £500m impact on profit due to the current pandemic.
Sainsbury’s, which has stores across the country, said today that lockdown measures have impacted its sales of fuel, clothing and general merchandise.
Clothing sales for the company are down by 53 per cent for the past seven weeks, with fuel sales dropping 52 per cent and general merchandise sales decreasing by 22 per cent.
However, it added that this was “broadly offset” by approximately £450m in business rates relief, as well as stronger grocery sales, which are up by 12 per cent.
In the report, the company also stated that its profits had declined by 2 per cent in 2019, dropping to £586m.
Mike Coupe, CEO of Sainsbury’s, commented: “The last few weeks have been an extraordinary time for our business.
“First and foremost, I want to say thank you to all of our colleagues.
“They have shown outstanding commitment and resilience over the past few weeks and I am in awe of their adaptability and the efforts they have made to continue to serve our customers.
“Across every part of the business, colleagues have played their part as we have done everything possible to feed the nation and to prioritise those who are least able to access food and other essential services.
“This is an unsettling time for everyone, but I am incredibly proud of the way the business has responded, continually adapting and responding to customer feedback.
“We will continue to work hard to provide food and other essential products to households across the UK and Ireland who are adapting to a new way of living.”
Nigel Frith, senior market analyst at AskTraders, added: “Sainsbury’s profit hit just goes to show how much retailers and supermarkets are relying on their consumer base to keep them afloat during their pandemic.
“It’s completely understandable that their fuel sales have dropped, people aren’t driving their cars as often and obviously more people are working from home or they have been furloughed.
“Their general merchandise may have only dropped by 22 per cent, but that’s still a massive slump compared to what they would have been at, at this point of last year.
“With many retail outlets that have closed amid COVID-19, it seems that British consumers are in fact listening to rules and purchasing only essential items - perhaps clothes in a supermarket doesn’t seem to be classed as essential.
“With groceries also being up 12 per cent at the supermarket chain, it seems to be that they have adapted pretty well to the pandemic - it might just be the case that another chain of the supermarket could be a lot closer to certain consumers or consumers are opting for cheaper products and therefore are going to different supermarkets.”
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