Sainsbury’s profits take a hit

Sainsbury’s profits take a hit

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Sainsbury’s (LON:SBRY) revealed a decline in profits on Thursday in its half year results.

Shares in the supermarket chain were up during trading on Thursday morning.

Sainsbury’s said that, for the 28 weeks to 21 September, underlying profit before tax declined by 15% to £238 million, compared to the £279 million figure recorded for the same period the year prior.

It blamed the combined impacts of the phasing of cost savings, higher marketing costs and tough weather comparatives for the drop in profits.

Retail sales (excluding fuel) were down 0.6% and like-for-like sales (excluding fuel) were down 1%.

Earlier this year in April, Sainsbury’s £7.3 billion takeover of Asda (NYSE:WMT) was blocked by the Competition and Markets Authority because it would have created a “poorer overall shopping experience”.

The supermarket chain also revealed at the end of September that it will be closing many stores and opening new ones.

Sainsbury’s warned in its half year results that consumer outlook “remains uncertain”.

“We expect profits in the second half to benefit from the annualisation of last year’s colleague wage increase and a normalisation of marketing costs and weather comparatives,” Sainsbury’s, reiterating its September guidance.

“We have created positive momentum across the business through strategic investments in our customer offer,” Mike Coupe, Chief Executive, commented on the results.

“We have lowered prices on every day food and groceries, launched a range of value brands and are more competitive on price than we have ever been. We are investing in hundreds of Sainsbury’s and Argos stores, introducing new products and services and continually improving service and availability. As a result, customer satisfaction has increased significantly year on year,” Mike Coupe continued.

The Chief Executive said: “We have set out our plan to create one multi brand, multi-channel business. This will make the combined Sainsbury’s and Argos offer much more accessible for customers and gives us the opportunity to make our business more efficient.”

J Sainsbury plc shares (LON:SBRY) were trading at +0.15% as of 10:21 GMT Thursday.