The high street crisis has left Sainsbury’s fearing the Christmas trading season in the run up to December. Indeed, with the high street crisis hitting companies following a successful UK summer, the market remains considerably “competitive”. Despite this, Sainsbury’s has reported an increase in half year profits.
Britain’s second largest supermarket chain revealed its interim results for the 28 weeks to 22 September on Thursday.
Group sales are up by 3.5% at £16,884 million with retail sales (excluding fuel) at 1.2%. Like-for-like sales (excluding fuel) have increased by 0.6%. Additionally, underlying profit before tax has jumped by 20.3% from £251 million to £302 million. The group’s underlying earnings per share were reported up by 18% to 10.3p.
Morover, interim dividend of 3.1% per share is in line with the group’s policy of paying 30% of prior full year dividend.
Commenting on the results, Sainsbury’s Group Chief Executive, Mike Coupe, said:
“The market remains very competitive and we are transforming our business to meet rapidly changing customer needs. We have fundamentally changed how our 135,000 Sainsbury’s store managers and colleagues work and I would like to thank them for their ongoing hard work through this period.”
“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.”
“Our strategy of offering customers a distinctive range of high quality and great value food has driven like-for-like sales growth at Sainsbury’s. Where we have invested to lower prices, volumes and transactions have increased.”
“Our proposed combination with Asda will create a dynamic new player in UK retail, with the ability to further lower prices and to reduce the cost of living for millions of UK households. The Competition and Markets Authority is conducting its in-depth Phase Two review into the proposed combination and we continue to engage constructively with the CMA and Panel.”
All 251 Argos stores, including the 60 new stores opened in Sainsbury’s supermarkets, continue to trade well, the group said.
Sainsbury’s is not the only leading retailer to profit from the British summer of scorching weather and football success.
However, retail sales dropped in September by 0.8%, a decrease that was considerably larger than anticipated. Likewise, the drop in food sales reached 1.5% for that sector alone. With the John Lewis Partnership (LON:JLH) reporting a 99% drop in profits, low-budget supermarkets Aldi and Lidl continue to snap up their share of the market.
At 11:10 GMT today, shares in Sainsbury’s (LON:SBRY) were trading at +0.34%.