Sainsbury's boss hails upturn despite year of mixed fortunes

Underlying profit was up, but costs including failed Asda bid hit profit before tax.

Coupe: 'We will increase and accelerate investment in the core business'
Coupe: 'We will increase and accelerate investment in the core business'

Sainsbury’s chief executive Mike Coupe said the supermarket would accelerate the transformation of its stores, a week after the competition watchdog blocked its planned mega-merger with Asda.

The company today announced results for the year ending 9 March, showing a mixed picture of its performance. Group sales were up 2.1% to £32.4bn, while underlying profit rose 7.8% to £635m. Sainsbury’s also increased its dividend to shareholders.

But a series of extraordinary costs, totalling £396m, meant profit before tax fell 41.6% to £239m. These included £46m on the failed Asda merger and £118m related to the company’s pensions scheme, along with other costs related to Argos and Sainsbury’s Bank.

The Sainsbury’s/Asda merger was intended to help both brands cut costs and more effectively compete with the likes of Tesco, Morrisons, Aldi and Lidl.

But it was Sainsbury’s that arguably needed the boost more; according to Kantar and Nielsen data, it has been the worst-performing supermarket for the past several months. Kantar data suggests that it was the only supermarket to see sales fall (by 1.2%) in the 12 weeks to 22 April.

Coupe said the business would now continue to invest in its stores and technological capability. Yesterday, Sainsbury’s opened the UK’s first checkout-free convenience store in Holborn, central London; it came three days after Argos opened its first self-service store in Dulwich, south London.

Other recent innovations include the introduction of electric delivery vans and a visual search app for Argos.

"Customers continue to rate us top for quality food and we are growing our premium ranges," he said. "We are also focused on reducing costs so that we can invest to make commodity products better value for our customers.

"We will increase and accelerate investment in the core business, investing to improve over 400 supermarkets this year. £4.7bn of our revenue now comes from our online businesses and we are increasing investment in technology to make shopping across Sainsbury's, Argos and Sainsbury's Bank as quick and convenient as possible.

"I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change."

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