Sainsbury’s full-year profits fall 8.2% – BBC News

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Sainsbury’s full-year profits before tax have fallen to 503m, down 8.2% from 548m, hit by price cuts and tough competition on the High Street.

Group sales in stores open for more than a year fell 1%.

The supermarket chain’s chief executive Mike Coupe said: “The market remains competitive and the impact of cost price pressures remains uncertain.”

But he added it was “well placed to navigate the external environment” and “focused on delivering our strategy”.

The full-year dividend paid to shareholders has been reduced by 15.7% to 10.2p a share.

These are the first results to include figures from the Argos and Habitat brands, which were bought for 1.4bn last year.

Once their sales are added in, overall group sales increased 12.7%

Merging the operations has produced cost savings of 130m and a profit contribution from Argos of 77m.

Mr Coupe said: “We have opened 59 Argos Digital stores in Sainsbury’s supermarkets and they are performing well. We are therefore accelerating our plan to open a total of 250 Argos Digital stores in Sainsbury’s supermarkets.”

Rising costs

Sainsbury has been hit by rising costs as it tries to woo customers. At the same time, it expects the inflation rate to stay at 2% to 3% over the next 12 months.

It says that as a result, underlying profits in the next six months will be lower than in the last six months.

Sainsbury’s chief financial officer, Kevin O’Byrne, told Bloomberg TV: “If you look at prices in our stores today, they are cheaper than they were two years ago and real wages have been growing.

“People are predicting real wages are going to get squeezed further and we are going to have to work harder to keep customers coming through our doors.”

Neil Wilson, senior market analyst at ETX Capital, said: “Sainsbury’s faces a squeeze on several fronts.

“On one side, there are discounters like Aldi and Lidl crushing prices and stealing market share, while Tesco and Morrisons are both in the middle of strong turnaround programmes that are leaving Sainsbury’s trailing.”

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