Sainsbury’s profits fall amid store closure costs
Written by Hannah McGrath
Sainsbury’s said that a £229 million bill for one-off store closures has all but wiped out profits for the first half of this year, as the grocer drives ahead with its transformation plans.
The supermarket group reported that pre-tax profits for the 28 weeks to 21 September 2019 had dropped to £9 million from £107 million in the same period last year.
Group sales, which include the Argos store estate, were down 0.2 per cent to £16.85 million, while retail sales fell 0.6 per cent.
In a statement the company said underlying profit had reduced by £41 million to £238 million due to “the combined impact of the phasing of cost savings, higher marketing costs and tough weather comparatives”.
Sainsbury’s said that it is continuing to invest in in-store and digital technology, with SmartShop handheld scanning devices now available in over 350 supermarkets.
In addition, Sainsbury’s said the integration of Argos stores would be stepped up in the coming year and that 176 Argos stores had been converted into a new ‘digital format’ in the first six months of this year, with the Pay@Browse areas now available in 362 Argos stores.
The statement also added that following a strategic review, the company’s financial services arm would no longer sell mortgages.
The company remains on track to meet analysts’ predictions of full year profits of £584 million in 2019/2020, down from £601 million in 2018/2019.
Chief executive Mike Coupe said: “We have set out our plan to create one multi brand, multi-channel business – this will make the combined Sainsbury’s and Argos offer much more accessible for customers and gives us the opportunity to make our business more efficient.”