UK supermarket group J Sainsbury has reported a pre-tax loss for the first half as its results were hit by weaknesses in its core supermarket operations and exceptional costs related to its business review.
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The group posted a pre-tax loss on ordinary activities of £39m (US$72.4m) for the first half to 9 October, compared to a year-ago profit of £323m. Underlying profit on ordinary activities before tax, exceptional items and amortisation of goodwill was £131m for the first half, down from £366m a year earlier. The company recorded exceptional operating costs of £401m and property write downs of £25m related to its business review.
Turnover including VAT and sales tax was £8.69bn, down from £9.70bn in the first half of last year. Sainsbury’s Supermarkets posted total sales up 3.5% to £8.35bn. Like-for-like sales growth including petrol was 1.5%, while like-for-like sales excluding petrol slipped 0.9%. Underlying operating profit at Sainsbury’s Supermarkets was £155m, compared to £313m a year earlier.
“Our performance in the first half has been impacted by our significant investment in the customer offer. Investing in price, improving availability and clearing surplus general merchandise all impacted first half results. Exceptional costs relating to our business review, the sale of Shaw’s Supermarkets and the return of capital also significantly affected the results for the period,” said chairman Philip Hampton.
“We have a new and experienced management team in place, which we have continued to strengthen, led by Justin King. We have now embarked on a sales led recovery, which we believe will enable Sainsbury’s to deliver long term sustainable performance and profit,” Hampton added.
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By GlobalDataChief executive Justin King said the company was beginning to implement the plans arising from the business review to rebuild a sustainable sales led recovery.
“Early and short-term actions to restore the effective delivery of our customer offer are being implemented. We have re-opened Buntingford depot to help improve availability and deliveries from this location start next week. New improved products are being added to our ranges and many of our Christmas lines are now in store. The recruitment of 3,000 additional colleagues is also well underway,” King said.
