Published: Чт, Мая 04, 2017
Science | By Carlton Santiago

Sainsbury's warns of cost pressures as profits dip to £503m

Sainsbury's warns of cost pressures as profits dip to £503m

"The market remains competitive and the impact of cost price pressures remains uncertain".

Argos, which has one of the most frequently visited retail websites in the United Kingdom, added £3.2bn in sales (including VAT) to Sainsbury's total and £77m of underlying profit before tax, since its parent company, Home Retail Group, was bought by Sainsbury's.

That was as good as it got - the best performance by Sainsbury's in three years, but the bar set pretty low in a hard period for food retailers as discounter competitors and deflation have stalked the aisles.

"Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price", Chief Executive Officer Mike Coupe said in the statement.

According to Coupe, "We have opened 59 Argos Digital stores in Sainsbury's supermarkets and they are performing well".

Mr Coupe said it had been a "pivotal year" for the group after the £1.4bn takeover of Argos, which contributed £77m to profits.

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Any pressures Sainsbury's food business is facing from discounter competition in the form of Lidl and Aldi, emphatic turnarounds at Big Four rivals Tesco and Morrisons, and slowing earnings growth squeezing consumers, would have to be faced whether Argos was in the picture or not.

Sainsbury's results showed that while convenience store sales were up 6% and online groceries by 8%, the group's supermarkets saw a decline of 2%.

Shares in Sainsbury's are down 3 percent year on year but up 12 percent so far this year.

The news broke earlier this Wednesday that the second largest supermarket Sainsbury was massively losing in the first three months of the year. The supermarket giant recently announced a decent price bump over "challenging" market, whereas a handful of UK-based supermarket also suffered the same dilemma.

After more than two years of deflation, food and fuel prices started to rise towards the end of our financial year, driven by the devaluation of sterling and commodity price increases.

British equities were little moved by data showing growth in the country's construction industry accelerated in April, adding to tentative signs that the economy might be recovering a little momentum after a lacklustre start to 2017.

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