Sainsbury’s chief executive Simon Roberts has urged the government to be cautious about further tax increases, warning of the “high impact” of recent national insurance changes on retailers and jobs.
It comes as the grocer recorded its strongest sales growth in almost a year, helped by strong demand at Argos and a warm weather boost to summer fashion and seasonal categories like fans and paddling pools.
Roberts said: “[The government] have got to be cautious about the amount of cost coming into the industry,” as the sector faces mounting pressure from new regulations and cost increases.
The remarks follow April’s hike in employer national insurance contributions – part of a £25bn tax increase – alongside a 6.7% rise to the national living wage.
Sainsbury’s said the national insurance change alone would cost the business £140m this year, while a new packaging tax is expected to add another £55m to its bills.
“In all our discussions we have got to make sure there isn’t any further tax impact on the system,” Roberts added.
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The CEO also called on ministers to recognise the impact of business rates on the industry, as the government consults on increasing rates for the largest retail properties. “They’ve got to understand how unfair a tax [business rates] are and why it impacts jobs,” he said.
Sainsbury’s continues to hold off competition from rivals including Asda, which has ramped up price cuts and customer experience efforts in a bid to reverse a sales slump. Despite this, the group did not upgrade its profit guidance for the full year, which remains at around £1bn.
Analysts at Hargreaves Lansdown noted that Sainsbury’s has reached its highest market share in a decade, with no sign yet of an all-out price war among the UK’s major grocers.
Roberts said there was “a lot for this year still to play out”, citing ongoing cost pressures linked to beef, cocoa and tax changes.
He also acknowledged a small benefit from recent cyber attacks that impacted competitors M&S and the Co-op, disrupting their availability.
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