Sainsbury’s profits sink on store closure costs

Profits at Sainsbury’s have been almost wiped out for the first half of the year after being hit by costs relating to store closures.

In September, Sainsbury’s said it would shut a number of stores, including many Argos outlets as it moves the brand into its supermarkets.

The supermarket group said pre-tax profits dropped to £9m from £107m in the same period last year.

Sainsbury’s also announced a 1% drop in like-for-like sales.

Food sales fell by 0.1%, which the company blamed on tough comparatives from last year when demand was buoyed by good weather.

Like-for-like general merchandise sales fell by 2.5% and clothing dropped by 1.2%, which Sainsbury’s also blamed on last year’s hot weather and “a subdued non-food market”.

The store closures resulted in a £203m charge in Sainsbury’s half-year results, which cover the 28 weeks to 21 September.

Stripping out the cost, underlying pre-tax profit reached £238m, down from £279m in the same period last year.

Commenting on its outlook, Sainsbury’s said: “Retail markets remain highly competitive and the consumer outlook remains uncertain.”