Supermarket giant Sainsbury’s has recorded a fall in sales and profits, as price wars continue to take their toll.
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John Ibbotson, director of the retail consultancy, Retail Vision, remarked: “The bill for Sainsbury’s campaign to keep competitive has finally fallen due”.
Chief executive Mike Coupe said Sainsbury’s outperformed its main supermarket peers and maintained market share in a “competitive, deflationary environment”.
It is likewise stepping up its online business, announcing on Tuesday plans to double the number of stores offering a “drive thru” click and collect option for groceries.
Last month Sainsbury’s made a GBP1.4bn (US$1.99bn) takeover bid for Home Retail Group, which operates the Habitat home and Argos general merchandise stores.
The firm, which is in the process of buying Argos owner Home Retail Group, will update on its full-year results today. Analysts expected 683.4 million pounds, according to the average of 14 estimates.
However, its share price fell more than 3% in early trading on the FTSE 100 after it confirmed an 8% fall in its full-year dividend.
Sainsbury’s, which has coped better than most with the recent turmoil in the sector, did beat analysts’ profit forecasts for the 2015-16 year and said its strategy was working well.
Mr Coupe said there was now “zero” difference in prices between the Big Four rivals, while prices relative to the discounters were also coming down.
He said the ongoing pricing pressures and food price deflation were the reason sales, operating margins and hence earnings were narrower.
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As part of its commitment to provide “lower regular prices”, Sainsbury’s abandoned last month the issue of new money-off vouchers under its Brand Match price pledge which it said it was getting rid of following customer feedback.
