Sainsbury's pre-tax profit falls 8%

Sainsbury's "Food dancing" ad, created by Wieden & Kennedy
Sainsbury's "Food dancing" ad, created by Wieden & Kennedy

Sainsbury's has reported an 8.2% fall in pre-tax profit to £503m from £548m for 2016.

In its preliminary results for the 52 weeks to 11 March 2017 released this morning, the supermarket reported a 3% rise in total transactions to 26 million each week.

Group sales including VAT rose 12.7% to £29.1bn from £25.8bn. Retail sales including VAT but excluding fuel were also up 14.1%. The retailer said that this was because of a 14.5% contribution from Argos. Sainsbury’s like-for-like sales fell 0.6%.

Mike Coupe, group chief executive of J Sainsbury, said: "We are pleased with the progress made since we acquired Argos. 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 and will deliver our £160m EBITDA synergy target by March 2019, six months ahead of schedule.

"We continue to find ways to simplify our business and reduce costs. We are on track to deliver our three-year £500m cost saving programme by the end of 2017/18 and we will deliver a further £500m of cost savings over three years from 2018/19."

Coupe added that Sainsbury’s has reduced net debt by £349m to £1.5bn.

Phil Dorrell, partner at Retail Remedy, added: "Sainsbury’s has reported growth in all categories except its core supermarket offer. Should this worry stakeholders though? If customer's shopping habits are shifting away from that format, Sainsbury’s should move with them.

"For the time being, lost sales and profit from Sainsbury’s’ supermarket format is being made up in other areas, which in part, fulfils its commitment to shareholders.

"It is the long term share value that we need convincing on. If we were Coupe we would be very conscious that for all the ambitious plans in developing general merchandise, Sainsbury’s core proposition is food retailing. Sushi and patisserie does not fill a family's fridge."

In January Sainsbury's launched its first ad campaign by new agency Wieden & Kennedy London. The "Food dancing" ad was the first spot produced since the supermarket moved the business from 35-year incumbent Abbott Mead Vickers BBDO. 

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