UK’s second-largest supermarket Sainsbury’s posted a sharp profit slide with its shares down much further than the FTSE 100’s unexpectedly shallow fall. The shares were down by 5.5 percent at 242p, the lowest since October. UK distributor has completed the first half of its 2016/2017 financial year, in late September, on an underlying CA (VAT) of 13.9 billion pounds (+ 2.1%), or – 1 % like for like.
The grocer blamed pricing pressures for the loss stating that it continued to impact margins. Chief executive Mike Coupe said: “We have invested in the quality of our products while reducing prices on everyday items, delivering volume growth and outperforming the market in customer service and availability.” He added that the supermarket has made good progress on delivering its strategy despite the loss incurred.
But Mr Coupe also adds that “the market remains competitive and pricing pressures continue to weigh on margins. (Moreover), the impact of the devaluation of sterling on the retail prices remains uncertain. “Thus, in the 2nd half, the recurring income of Sainsbury should be less than that released during the first half of the year.
The acquisition of Home Retail Group (HRG Argos sign), finalized on September 2 should accelerate the group’s strategy. GM Mike Coupe also confirmed savings targets.