Store closure costs see Sainsbury's profits plunge
By James Young | 7th November 2019
Sainsbury's have revealed that profits for the first half of the year were practically wiped out by costs relating to the closure of some stores.
Profit before tax for the 28 weeks to September 21 came in at £9million, down from £107million for the same period last year.
A review of the store estate led to £203 million of one-off costs recognised in the results. Total one-off costs for the first-half of the year were £229 million.
Sainsbury's has endured a difficult six months with the proposed merger with ASDA being blocked by the UK competition watchdog. That caused shares to drop by as much of a third over the past year.
The half-year results show total sales dropped by 0.2 per cent to £16,856 billion, with retail sales, excluding fuel, down 0.6 per cent and like-for-like sales down one per cent.
Sainsbury's is continuing plans to consolidate the store estate it has, not just with its supermarkets and convenience stores, but with Argos stores.
The announcement said the company had a "Unique opportunity to structurally reduce costs by c.£500 million over five years as we integrate Sainsbury's and Argos."
Announcing the Interim Results 2019, Mike Coupe, Chief Executive, said: "We have created positive momentum across the business through strategic investments in our customer offer.
"We have lowered prices on every day food and groceries, launched a range of value brands and are more competitive on price than we have ever been.
"We are investing in hundreds of Sainsbury's and Argos stores, introducing new products and services and continually improving service and availability.
"As a result, customer satisfaction has increased significantly year on year.
"We have set out our plan to create one multi brand, multi-channel business.
"This will make the combined Sainsbury's and Argos offer much more accessible for customers and gives us the opportunity to make our business more efficient.
"We offer great quality at affordable prices with convenient ways to shop.
"I would like to thank colleagues for all their hard work at this busy time of year. We are very much looking forward to delighting our customers throughout the upcoming festive period."
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