Can Sainsbury’s flat earnings squash profiteering claims?
Sainsbury’s said it expects its full-year profit to be at the top end of expectations despite posting a 27 per cent decline in statutory profit before tax during the half year.
On a statutory basis, the ‘Big Four’ grocer also said group revenue lay largely flat, rising only by 3.5 per cent to £16.9bn.
The British supermarket said that retail operating profit also only managed to rise by two per cent to £485m due to the rollout of cost-saving measures amid the cost of living crisis.
Sainsbury’s has been ramping up its loyalty Nectar card scheme so that shoppers can get discounts on their groceries during a period of high inflation — an attempt to compete with discounters such as Lidl and Aldi.
The firm said it achieved £1.1bn worth of cost savings over the last two and a half years and is on track to deliver £1.3bn of cost savings by March next year.
It comes as ‘Big Four’ grocery stores have had increasing pressure placed on them during the cost of living crisis to keep prices as low as possible for consumers, with all major supermarkets having introduced price cuts on products.
Earlier this year, supermarket bosses were also called to answer questions in parliament about whether or not they had exploited inflation by raising grocery prices.
Clothing sales at the supermarket also declined by 8.4 per cent as unseasonable weather in the winter and summer impacted trade.
Despite the relatively flat figures, Sainsbury’s said it expects profit before tax for the year to reach between £678m and £700m, a rise of the upper half of its previous guidance range of £640m.
Simon Roberts, chief executive of Sainsbury plc said: “Food is firmly back at the heart of Sainsbury’s. We’ve never been more competitive on price and our focus on value, innovation and service is giving more customers more reasons to shop with us.
“We know people are still finding things tough and we’re working harder than ever to reduce our costs, putting the money back into our customers’ pockets through lower prices on the products they buy most often.”
He added: “I’m pleased to say food inflation is coming down and we are passing savings on to customers. We’ve rolled out Nectar Prices to over 6,000 products and the vast majority of customers are now shopping with Nectar, saving over £450m since April.”