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Sainsbury’s expecting first loss in a decade

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Big Four grocer Sainsbury’s is expected to report its first full-year loss in a decade tomorrow. This comes off the back of intense price competition between the supermarkets and discounters, a change in consumers’ shopping habits (who are increasingly spending at convenience stores and online) as well as property writedowns that are affecting more than one British food retailer.

Analysts’ consensus is for Sainsbury’s is that it will post pre-tax profits of £654m — a decline of more than a quarter compared with the previous year.

Last month Tesco, the UK’s biggest supermarket by revenues, recorded one of the largest losses in British corporate history, driven by £7bn of one-off charges, mostly relating to stores. In March Morrisons announced £1.3bn of property writedowns based on an assessment of current market conditions.

In November 2014, Chief Executive Mike Coupe said the company would cut prices by £150m, lowering profit margins. Coupe warned that like-for-like sales in supermarkets will fall for the “next few years”.

It is estimated that Morrisons, Britain’s fourth largest grocer, will also report a fall in sales in a trading update on Thursday.

Kantar data shows that Sainsbury’s, Britain’s third largest supermarket, is still performing better than most, with its sales growth ahead of the other three major supermarkets on a two-year basis. The chain is also due to open eight stores by early 2018.

 

Published on Tuesday 05 May by Veebs Sabharwal

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