Sainsbury’s full-year profits fall 8.2pc

Sainsbury’s (LON:SBRY) full-year pre-tax profits have fallen from £548 million last year to £503 million, down 8.2 percent.

These results are the first since the group purchased Argos and Habitat for £1.4 billion last year.

“The market remains competitive and the impact of cost price pressures remains uncertain.” said Sainsbury’s chief executive Mike Coupe.

The results do not come at much of a surprise. Retailers are expected to struggle this year due to rise in costs and the fall in the pound post-Brexit.

“We have opened 59 Argos Digital stores in Sainsbury’s supermarkets and they are performing well. We are therefore accelerating our plan to open a total of 250 Argos Digital stores in Sainsbury’s supermarkets,” said Coup.

“We continue to find ways to simplify our business and reduce costs. We are on track to deliver our three-year £500m cost saving programme by the end of 2017-18 and we will deliver a further £500m of cost savings over three years from 2018-19,” he added.

Sainsbury’s have announced cost-cutting plans. They hope to save £130 million this year and committed to £500m of savings over the next three years.

“If you look at prices in our stores today, they are cheaper than they were two years ago and real wages have been growing,” said the supermarket’s chief financial officer, Kevin O’Byrne.

“People are predicting real wages are going to get squeezed further and we are going to have to work harder to keep customers coming through our doors.”

Neil Wilson, senior market analyst at ETX Capital, said: “Sainsbury’s faces a squeeze on several fronts,”

“On one side, there are discounters like Aldi and Lidl crushing prices and stealing market share, while Tesco and Morrisons are both in the middle of strong turnaround programmes that are leaving Sainsbury’s trailing.”

Sainsbury’s shares were the biggest faller on the London FTSE 100 index. They dropped over 2 percent in the first 20 minutes of trading.