Sainsbury’s bosses situation main warning to clients as Iran battle hits costs
The UK’s second biggest grocer warned the Middle East conflict will impact its customers and business, as it posted a £619m pre-tax profit amid rising food inflation fears
Bosses have issued a warning(Image: tupungato via Getty Images)
Sainsbury’s has issued a warning that the Iran war “will impact both our customers and our business,” as the supermarket behemoth saw profits slightly increase. The FTSE 100 grocer reported a pre-tax profit of £619m for the year to February, a 2% rise from the previous year, while total sales grew by 5%.
Concerns over escalating food inflation have intensified in recent weeks, with a prominent industry body cautioning that price growth could hit double figures this year.
Chief Executive Simon Roberts stated he is “relentlessly focussed” on delivering value to firms and will do “everything [he] can to support our customers”.
The supermarket’s underlying retail profit dipped by more than 1% to £1bn, which Sainsbury’s attributed to “significant operating cost inflation” and a “more competitive market”, as reported by City AM.
Supermarket chiefs are urging the government to provide energy bill assistance to prevent them from having to raise prices for consumers. Last week, Tesco boss Ken Murphy claimed he “does not recognise” the Food and Drink Federation’s prediction of between nine and 10% food inflation this year.
On Thursday, Sainsbury’s boss Simon Roberts said: “Rather than pass through the full extent of cost inflation, we invested to sustain the strength of our competitive position while also refreshing stores.”
In its financial report, the supermarket stated: “We will continue to make deliberate, balanced choices to sustain this strong competitive position in the year ahead and expect to continue to outperform the grocery market.
“The conflict in the Middle East will impact both our customers and our business. The duration and extent of these impacts is very uncertain.”
Sainsbury’s posted a robust Christmas trading update in January, boasting a 3.3% rise in festive sales and a 3.9% leap to £10bn. The supermarket is the UK’s second largest with a 15.6% market share, significantly trailing Tesco but a solid 4% above Asda in third place.
Sainsbury’s revealed that Argos, which it owns, continues to grapple with a “subdued market,” as sales rose slightly by 0.7%. The catalogue retailer was acquired by Sainsbury’s in 2016, but analysts have cautioned that it is becoming a burden on the supermarket’s performance.
The retailer axed over 2,000 jobs and lost more than £200m in its latest financial year and Sainsbury’s had been considering a sale of the brand before it withdrew from discussions with Chinese retail behemoth JD.com.
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