Sainsbury’s pre-tax profit down 17.9% to £308 million
Supermarket's interim results for the 28 weeks to 26 September 2015, show it has avoided a 'truly disastrous' pre-tax profit fall
16 November 2015 | 0
Despite publishing less-than-favourable financial results with underlying profit before tax down 17.9% to £308 million (down from £375 million in 2014/15), Sainsbury’s maintains its “delivery of strategy” is “on track in a highly competitive market”.
Sainsbury’s interim half-year results to 26 September 2015 show underlying group sales including VAT were down 2% to £13,641 million. Retail sales (inc VAT, ex fuel) were down 0.1%, while like-for-like sales (inc VAT, ex fuel) were down 1.6%. What’s more, underlying basic earnings per share were down 17.2% to 12 pence (from 14.5 pence in 2014/15)
However Mike Coupe, chief executive, said the group is “delivering volume and transaction growth as customers value our quality improvements and our clearer, simpler message of lower regular prices”.
He said that alongside its core food offering, Sainsbury’s is “delivering on our strategy to expand our non-food businesses with further growth in clothing, general merchandise and Sainsbury’s Bank”.
Cost savings ahead of plan
He added the business continues to be run efficiently and its cost savings programme is ahead of plan. Sainsbury’s now expects savings of around £225 million by the end of this financial year and Coupe says it is on track to deliver its target of £500 million cost savings over the next three years.
Coupe remained confident in his praise of the business, stating that while “the grocery retail marketplace remains challenging, Sainsbury’s is a great business, run by an experienced management team, supported by talented colleagues and strong values”. He said it is “looking forward to a successful Christmas, offering our customers fantastic products and great value”. The chief executive singled out several products in his predictions for Christmas customer favourites, including its Orkney Island dressed crab, Taste the Difference 18 Month Mature Cognac Laced Christmas Pudding, which recently won the Good Housekeeping 2015 taste test, and the Taste the Difference Golden Bow Fruit Cake.
Commenting on the results, Connor Campbell, a senior market analyst at www.spreadex.com, told ShelfLife: “In a sign of just how tough the supermarket sector is at the moment, Sainsbury’s 17.9% fall in half year profit was actually better than 24% drop analysts had expected. It appears that clothing was the company’s saviour in the first half of the year; that division growing 10% compared to the 1% fall in food sales. Yet all that really mattered was the avoidance of a truly disastrous (instead of just very, very bad) pre-tax profit fall, allowing Sainsbury’s to jump just shy of 2% to a near four month high.”