Sainsbury’s profit before tax has dropped by 40% to £132m for the 28 weeks to 22 September 2018 compared with £220m the year before.
However, the supermarket’s takeover of Argos in 2016 provided a boost to the company providing an underlying profit growth of £51m driven by Argos synergies. It also reached its projected £160m in earnings synergies nine months ahead of schedule.
Sainsbury’s ended the period with a underlying profit before tax figure of £302m up 20.3% from the same period in the previous year.
Its like-for-like sales excluding fuel increased by 0.6% while its total retail sales saw 1.2% growth. Its clothing sales dropped by 1%. The supermarket’s group sales were up 3.5% to £16.8m.
Mike Coupe, Sainsbury’s group chief executive, said the market remained “very competitive” and added Sainsbury’s was transforming its business to meet “rapidly changing customer needs”. He said its proposed merger with Asda would create a “dynamic new player” in UK retail, allowing the company to lower prices and reduce the cost of living for UK households.
He said: “We have delivered a solid first half performance and profit has increased because we have delivered significant Argos synergies ahead of schedule. Sales of food and general merchandise were boosted by the hot summer, but general merchandise margins remain under pressure.
“The consumer outlook is uncertain as we head into our key trading period. The grocery, general merchandise and clothing markets continue to be highly competitive and very promotional. However, we remain on track to deliver current market consensus for 2018/19 UPBT of £634m.”