1st May 2019 07:36
LONDON (Alliance News) - J Sainsbury PLC on Wednesday said it intends to invest in improvement of its grocery stores and reduce its costs following a double-digit decline in pretax profit in its most recently ended financial year.
The FTSE 100-listed company, which last week was blocked from merging with rival Asda, reported pretax profit of GBP239 million for the 52 weeks to March 9, down 42% from GBP409 million a year earlier, due to an increase in administrative expenses to GBP1.73 billion from GBP1.42 billion.
Underlying pretax profit came in at GBP635 million, up from GBP589 million a year ago and beating market expectations. Analysts had expected underlying pretax profit for financial 2019 to be GBP626 million.
The UK's second largest supermarket chain said it delivered GBP220 million of cost savings during the year to offset the impact of cost inflation and the increase in Sainsbury's staff base rate of pay to GBP9.20 per hour.
Sainsbury's proposed a final dividend of 7.9 pence a share, bringing the total payout for the year to 11.0p, up 7.8% year-on-year.
Revenue rose by 1.9% to GBP29.00 billion from GBP28.46 billion a year prior.
Underlying sales increased by 2.1% on the prior year, with fuel sales growing by 12%, driven by both retail price inflation and volume growth. Retail sales increased by 0.4% helped by new space. Retail like-for-like sales decreased by 0.2%.
The company noted that Grocery & General Merchandise sales grew in the first half, benefiting from the hot summer, with a more subdued performance in the second half of the year. Overall, Grocery sales grew by 0.6% year-on-year, while General Merchandise sales were flat.
Clothing sales declined by 0.8%, due to reduced promotional activity whilst full price sales increased, it said.
"I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change," said Chief Executive Mike Coupe.
"We will increase and accelerate investment in the core business, investing to improve over 400 supermarkets this year," continued Coupe. "We are also focused on reducing costs so that we can invest to make commodity products better value for our customers."
Sainsbury's did not provide any further comment in its earnings statement Wednesday on its failed merger attempt with rival UK supermarket Asda.
The UK Competition & Markets Authority blocked the proposed GBP12 billion tie-up between the supermarket chains on the grounds it would result in higher prices for consumers and damage competition.
The watchdog claimed that the deal would have resulted in a "substantial lessening of competition" at both a national and local level for people shopping in supermarkets.
Sainsbury's boss Mike Coupe at the time claimed the regulator's decision took money out of customer's pockets, because of the lower prices the combined company promised to charge.
The company said in its statement Wednesday that GBP46 million of transaction costs were incurred in relation to the proposed combination with Walmart-owned Asda, and principally comprised deal preparation, integration preparation and financing.
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