Sainsbury’s profits fall: its a tough (super) market
With inflation having been pretty non-existent in recent years and increased competiveness, it’s perhaps not surprising that Sainsbury has announced that its annual profits have fallen.
Sainsbury’s announced this morning (4 May) that its underlying profits for the year to 12 March were £548m, which is £133m down from last year. The result for shareholders is a proposed full-year dividend of 12.1p per share which represents a 8.3% decrease compared to last year.
But were Sainsbury’s results “bad”? There was an inevitable immediate drop in share price, but the price remains near its 52 week high of £2.92 per share. Analysts also seemed to be pleased with the results, with one commentator describing the results as solid and another saying that the company had done a lot in the last year or so to remove complexity over it’s pricing in its stores.
Sainsbury is also not alone. Last month Tesco announced that its “profit improvement” would slow in the first half of this year. This is in the context of a £6.4bn loss that Tesco reported last year.
Meanwhile, in the discounters camp (Aldi and Lidl), it was reported in late 2015, that they have seen their joint share of the groceries market double to 10% in just three years. Tesco still remained top though with a 27.9% share of the groceries market.
Dave Lewis, Tesco’s chief executive, described the market place (or more accurately supermarket place!) in November 2015 as "challenging, deflationary and uncertain" and that still appears to be an accurate summary 6 months on, for the larger supermarkets at least.