Sainsbury’s profit down 39% as COVID costs outweigh sales surge
UK supermarket chain Sainsbury’s (SBRY.L) reported a 39% drop in annual underlying profit on Wednesday as strong food sales during the COVID-19 pandemic were offset by additional costs and a decision to forgo reduction in corporate tariffs.
But Sainsbury’s, the country’s second-largest supermarket group after Tesco (TSCO.L), said it had started its new fiscal year on a strong footing and expected a strong rebound in profits.
The company made underlying pre-tax profit of 356 million pounds ($ 494 million) in the year ending March 6, according to its forecast of “at least” 330 million pounds, but down from the Â£ 586million she made a year earlier.
Grocery sales rose 7.8%, general merchandise sales rose 8.3% and online sales doubled, but the company said it incurred additional costs of $ 485 million. pounds due to the pandemic.
He also returned government-offered tariff relief to businesses worth around Â£ 410million.
Sainsbury’s shares have risen 7.4% so far this year, partly bolstered by speculation over the offers after Czech billionaire Daniel Kretinsky increased his stake to 10%.
Sainsbury’s three main domestic rivals – Tesco, Asda and Morrisons (MRW.L) – have all seen strong sales over the past year as coronavirus restrictions shut down the hospitality industry for extended periods of time and forced many people to work from home.
However, they also had to bear the costs of additional labor, staff sickness benefits and in-store measures to deal with the pandemic.
Earlier this month, Tesco reported a 20% drop in its annual profit, while last month Morrisons reported a halving of its profits. Read more
Sainsbury’s said like-for-like sales, excluding fuel, rose 11.3% in the fiscal fourth quarter, after increasing 8.6% in the third. Read more
He said he was comfortable with analysts’ consensus forecast for underlying pre-tax profit in 2021-2022 of around Â£ 620million.
“Like our customers, we all look forward to things feeling more normal over the next few months and look forward to a festive summer, but we are also cautious about the economic outlook,” said Managing Director Simon Roberts .
Sainsbury’s has raised its target of reducing net debt over four years from 750 million pounds to at least 950 million pounds and is paying an annual dividend of 10.6 pence.
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