Coronavirus to hit Sainsbury’s profits hard
By Sarah Wood | 30th April 2020
The Big Four supermarkets have seen long queues outside their stores since lockdown started, but Sainsbury's has warned that coronavirus will still dent its profits.
In a statement on its website, Sainsbury's said it expected COVID-19 to have a £500m impact on profits in the current financial year, with much of this associated with the costs of keeping customers and staff safe.
It said: "The COVID-19 pandemic has had a significant impact on our business since early March. We have had three clear priorities throughout: keeping our customers and colleagues safe; helping to feed the nation and supporting our communities and the most vulnerable in society."
Changes to the store to keep customers and staff safe, including increased cleaning, limiting numbers in stores and recruiting additional staff, have all come at a cost. In addition, Sainsbury's has made significant donations to charity and has continued to pay vulnerable colleagues who need to shield for 12 weeks, and any staff who need to self-isolate for 14 days.
While grocery sales were up 12 per cent in the seven weeks to 25th April - and as high as 48 per cent in the week of 21st March - spending on clothing and fuel are significantly down - at 53 per cent and 52 per cent respectively.
The retailer is currently assuming that lockdown restrictions will have eased gradually by the end of its first quarter (end of June), but that the business will continue to be disrupted until the end of the first half (mid-September). This scenario will mean grocery sales remain high, while sales of clothing and fuel remain much lower than usual, contributing to the predicted £500m reduction in profits.
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