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Sainsbury’s has revealed its underlying profit before tax was £340m for the 28 weeks ended 17 September, down 8% after investing in keeping prices low amid record inflation rates and staff wage increases.
Grocery sales were up 0.2% in H1, driven by strong growth in Q2 of 3.8% as lockdown comparatives eased and market price inflation accelerated. Grocery sales were 9.3% higher than H1 19/20.
However, general merchandise sales were down 6.1% across H1 but up 1.2% in Q2, driven by improved availability, favourable summer weather and strong market share gains. Growth was driven by categories such as consumer electronics and seasonal products.
Looking forward, the grocer said it is “well placed” through the peak trading period and into next financial year to support customers as they manage further cost of living pressures. It is halfway through a £1.3bn cost saving programme that has doubled the run rate of previous years and is “confident” in our competitive position in the face of macro challenges and operating cost inflation.
It said it continues to expect underlying profit before tax in FY22/23 to be between £630m and £690m and to generate retail free cash flow of at least £500m.
Simon Roberts, chief executive of J Sainsbury plc, said: “We really get how tough it is for millions of households right now. Customers are watching every penny and every pound and we know that they are relying on us to keep food prices as low as we can. We will have invested more than £500m by March 2023 in keeping prices lower by cutting our costs at a faster rate than our competitors, meaning we have more firepower to battle inflation.
“Over the past year and a half we have consistently passed on less price inflation than our competitors and I am confident we have never been better value. Argos is also performing well in a market where customers are looking for reassurance that they are getting great value and availability.”
He added: “We were the first supermarket to give our colleagues a second pay rise this year and have invested £150m to support them and drive outstanding service. I want to thank all my colleagues for their hard work and dedication and for everything they are doing to deliver for our customers. Our strong results are testament to the outstanding commitment and contribution from every member of our team.”
