Sainsbury’s has reported a fall in its pre-tax revenue, because it reveals it has spent greater than £560m on “keeping our prices low over the last two years”.
The grocery store chain mentioned that within the 12 months ending 4 March, its group gross sales had been up 5.4% to £35.15bn, however underlying revenue earlier than tax was £690m – down from £730m on the identical time final 12 months.
Chief govt Simon Roberts mentioned: “We really get how tough life is for so many households right now which is why we are absolutely determined to battle inflation for our customers.
“Our deal with worth has by no means been larger and we’ve spent over £560m preserving our costs low over the past two years.
“As a result, we are now the best value compared to our competitors that we have been in many years and we are delivering improved market share performance in Sainsbury’s and Argos.”
He mentioned that previously 12 months the corporate had invested £225m on measures for its employees, together with three pay rises.
An extra £66m was used as extra assist for British farmers, he mentioned, including: “I am grateful for their support in what has been another difficult year for food supply chains.
“We made these very deliberate selections and investments as a result of they make our enterprise stronger, however extra importantly as a result of they’re merely the suitable factor to do.”
The phrases echo these of Pret a Manger chief govt Pano Christou who, yesterday, informed Sky News that he would “proceed to take care of our individuals and our prospects”, regardless of warnings from the Bank of England about inflation.
Mr Roberts mentioned on Thursday: “While there is still much to be done and there is no doubt that the year ahead will remain challenging, I’m confident we will continue to deliver for our customers, colleagues, communities and shareholders.”
‘However you slice it, the panorama could be very difficult’
Sophie Lund-Yates, lead fairness analyst at Hargreaves Lansdown, mentioned: “Attracting customers with low prices now could be the right move for the long-term as it can encourage switching from rivals.
“However, the degradation in margin cannot go on perpetually and earnings are already feeling the pinch.
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“Cash flow is in a healthier position thanks to a reversal of COVID disruption, which helps to underpin efforts as the battle of the big four continues.
“However you slice it, the panorama could be very difficult.
“The huge pullback in spending in general merchandise shows the extent of consumer nerves, and the penchant for lower-priced grocery items needs to be short lived if Sainsbury’s is going to be able to lift the margin ceiling it’s currently enforced on itself.”
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Sainsbury’s figures present that comparable grocery gross sales rose 7.4% within the newest quarter, boosted by meals worth inflation, whereas Argos gross sales jumped 9.3%.
Food worth inflation hit the very best stage for greater than 45 years, at 19.1% within the 12 months to March, based on official information, however figures from Kantar this week signalled a slight easing in April, to 17.3%, from final month’s 17.5%.
Sainsbury’s shares had been down marginally in morning buying and selling.
Content Source: information.sky.com