4th Nov 2021 08:35
(Alliance News) - J Sainsbury PLC on Thursday said its revenue increased in the first half of its financial year, though the grocer warned growth will slow as shoppers are returning to pre-pandemic habits.
The grocer expects "grocery growth to moderate" in the second half, while its Argos non-food arm faces strong comparatives. All of this comes as the supermarket deals with supply chain challenges.
The pandemic meant more shoppers were drawn to supermarkets as other venues were closed due to lockdown curbs.
Sainsbury's shares were down 3.2% at 279.70 pence each in London on Thursday morning, the worst blue-chip performer.
Revenue for the six months that ended September 18 rose 5.3% to GBP15.72 billion from GBP14.93 billion a year ago.
The revenue figure does not include value-added tax but does include fuel. Group sales including both VAT and fuel were 5.9% higher, though stripping out fuel, it was just 0.2%.
Digital sales, meanwhile, were unchanged annually at GBP5.8 billion, though up more than double from the GBP2.7 billion achieved two years earlier, so before the onset of the pandemic.
The supermarket chain swung to a pretax profit of GBP541 million from a loss of GP137 million. Pretax profit was up markedly from the GBP9 million achieved two years earlier. Underlying pretax profit improved 23% to GBP371 million, from GBP301 million.
"The business performed well through the first half, benefiting from higher in-home grocery consumption and outperforming grocery competitors, while general merchandise sales declined, as expected, against an exceptionally strong period last year," Sainsbury's said.
General merchandise sales fell 5.8% during the half year, tumbling 11% in the second quarter alone. The general merchandise unit includes Argos.
Sainsbury's maintained its interim payout at 3.2p per share, though this is down 3.0% from 3.3p two years ago.
Looking ahead, the company backed guidance to deliver GBP660 million in underlying pretax profit for the year ending in March. In the previous financial year, underlying pretax profit decreased by 39% to GBP356 million. It totalled GBP371 million in the first half.
In the second half, Sainsbury's expects consumer behaviour to normalise and grocery growth to moderate. It also noted supply chain challenges and a tight labour market.
"However, our scale, advanced cost-saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas," Chief Executive Simon Roberts added.
By Eric Cunha; [email protected]
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