Sainsbury’s pre-tax profit down 17.9% to £308 million

Sainsbury’s has recorded a fall in half-year profits amidst a “particularly challenging” market. The old giants with massive chains of large stores face big challenges as customers turn to new discount supermarkets or more upmarket food shops like M&S.

However, it was ahead of analysts’ average forecast of 293 million.

Sainsbury’s, which is facing fierce competition in the retail sector, said cost savings for the first half totaled GBP115 million.

“Sainsbury’s H1 results appear to be slightly better than expected so the shares might post early gains”, David Stoddart, analyst at Edison Investment Research commented.

Statutory pre-tax profits, which include exceptional and other “one-off” charges that are often stripped out of the underlying figures, came in at £339m, a significant improvement on last year’s £290m when the supermarket swung into the red on the back of a £665m property write-down.

“The grocery retail marketplace remains challenging but Sainsbury’s is a great business, run by an experienced management team, supported by talented colleagues and strong values”.

Group sales (ex Value-Added Tax, inc fuel) were down 2 percent to 12.42 billion pounds.

“We are making good progress against the strategy we outlined last November”, Sainsbury’s boss Mike Coupe said bravely.

The FTSE100-listed company declared an interim dividend of 4 pence per share, down from the 5 pence paid a year ago.

Coupe said: “I am confident we are making progress and we are looking forward to a successful Christmas”.

Sales at supermarkets fell by just over 2%, driven by food deflation, lower like-for-like volumes, and “customers shopping across multiple channels”.

Like-for-like sales were down 1.6% in the 28 weeks to September 26, while underlying group sales were down 2% to £13.6 million, compared to £13.9m in the same period past year. “We now expect savings of around £225 million by the end of this financial year and we are on track to deliver our target of £500 million cost savings over the next three years”.