Sainsbury’s to face £500m profit hit
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Sainsbury’s has warned that its annual profits could take a £500m hit as a result of the ongoing pandemic, despite a recent rise in grocery sales.
The supermarket giant said the profit impact was due to “significant costs” in light of the nationwide lockdown, such as weaker sales fuel, clothing and general merchandise as well as lower financial services profitability.
In the past seven weeks, clothing sales have tumbled 53%, while fuel sales dropped 52% and general merchandise sales were down by 22%.
Nonetheless, the group said that this was “broadly offset” by stronger grocery sales, which were up 12% in the seven weeks to 25 April, and a £450m business rates relief.
For this reason, it expects group underlying profit before tax for the year to March 2021 to be broadly unchanged year on year, despite the alleged £500m profit impact.
In its latest trading update, underlying pre-tax profits fell by 2% to £586m in the full-year ended 7 March. Statutory profit-before-tax was £255m, up 26% from £202m.
Looking ahead, the group predicts that whilst lockdown restrictions may have eased by the end of June, business would continue to be disrupted until mid-September.
Mike Coupe, CEO of Sainsbury’s, said: “The last few weeks have been an extraordinary time for our business. First and foremost, I want to say thank you to all of our colleagues.
“They have shown outstanding commitment and resilience over the past few weeks and I am in awe of their adaptability and the efforts they have made to continue to serve our customers.”
He added: “Across every part of the business, colleagues have played their part as we have done everything possible to feed the nation and to prioritise those who are least able to access food and other essential services.
“This is an unsettling time for everyone, but I am incredibly proud of the way the business has responded, continually adapting and responding to customer feedback. We will continue to work hard to provide food and other essential products to households across the UK and Ireland who are adapting to a new way of living.”
