Sainsbury's reported the first decline in operating profit for a decade and an overall loss for the year as price cuts squeezed profit margins at the UK’s third-largest supermarket company.
Operating profit fell 11 per cent to £782 million in the 52 weeks ended 14 March, London-based Sainsbury's said in a recent statement, compared with the £752.4-million estimate of 13 analysts surveyed by Bloomberg. The reported net loss was £166 million.
Sainsbury's has followed competitors such as Tesco by lowering prices on hundreds of products and cutting jobs, as the UK’s biggest supermarkets battle to stem market-share losses to discounters Aldi and Lidl. The grocer recently said that it plans to invest a further £150 million cutting prices in its current financial year and reiterated its expectation that like-for-like sales will remain negative.
“The UK marketplace is changing faster than at any time in the past 30 years, which has impacted our profits, like-for-like sales and market share,” Sainsbury's chief executive officer Mike Coupe said in the statement.
Sainsbury's shares rose 3.3 pence, or 1.2 per cent, to 275 pence in London. They’ve gained 11 per cent this year, trailing Tesco’s 20-per-cent rise.
Operating margin on products sold in its stores narrowed by about 0.6 of a percentage point to 3.1 per cent.
Earnings per share fell 20 per cent to 26.4 pence, beating the 25.1-penny average of 19 analyst estimates.
Bloomberg News, edited by ESM
