Competition hit margins at Sobeys

Competition hit margins at Sobeys

Sobeys has reported an increase in second-quarter like-for-like sales but the Canadian grocer saw half-year profits fall.

The company booked a 0.2% rise in same-store sales for the 13 weeks to 2 November. The result compared to a 0.1% fall in the first quarter of Sobeys' financial year. Total sales were up 2% at C$4.43bn in the second quarter.

Gross profit dipped 0.3% in the quarter to C$993.3m as margin fell 51 basis points. Sobeys pointed to a "highly promotional retail grocery environment".

Operating income slid 27.7% to C$99.8m, with costs from Sobeys' acquisition of Safeway Inc's Canadian stores also affecting the result.

Lower gains from the disposal of assets in the quarter also played a role in net earnings dropping 27.1% to C$56.3m.

In the first six months of Sobeys' financial year, net income was down 43.6% at C$135.5m. Operating income was down 56.7% at C$226.8m. Sales increased 2.1% to C$9.03bn.