Sainsbury’s boss Simon Roberts says shoppers have become ‘even more focused on the cost of living’ (Image: Getty)
Sainsbury’s hailed itself for offering Brits “the biggest Aldi Price Match” as it unveiled sales of £25.9billion in its preliminary annual results. But the supermarket giant warned the war in the Middle East will impact both its customers and business, warning profits could fall this year as a result.
Chief Executive Simon Roberts said in a statement that there will be pressure on food prices amid fears the impact of the conflict on energy prices will drive up the cost of food production.
He added: “We offer the biggest Aldi Price Match in the market, with great prices on everyday essentials and even more value through Nectar Prices and personalised Your Nectar Prices. Alongside our standout fresh food offer and the growing strength of Taste the Difference, we are well placed to be first choice for more customers.”
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Industry group, the Food and Drink Federation, has warned food inflation could soar above 9% this year because of the crisis.
Mr Roberts urged the Government to provide energy support for the food sector as a result.
He called for a support scheme for energy-intensive industries to be extended to food producers and manufacturers.
The Sainsbury’s boss said: “The single biggest thing the Government can do is make sure they provide all the support they can to help with the cost of energy.”
The Chief Exec added: “The UK growing season is in full swing and the products we will be growing here result in a lot of energy.
“It means there are particular price pressures in fresh food with regards to energy, so it is important for those energy costs to be mitigated.”
Sainsbury’s told shareholders that it reported a £1.025billion underlying operating profit for the year to February 28, down 1.1% on the previous year. Meanwhile, pre-tax profits jumped by 55.3% to £393 million for the year. The retailer also revealed group revenues, excluding VAT, rose by 2.7% to £33.6bn for the year. Retail sales, excluding fuel, were up 4.3% at £25.9bn for the year to February 28, boosted by a 5.2% rise in grocery sales on the back of strong volume growth.
The retailer also reported sales in its Argos business grew by 0.7% to £4.1bn for the year.
Dan Coatsworth, head of markets at AJ Bell, said Sainsbury’s results show its core business is doing well, but Argos is dragging its heels.
He added: “While the ongoing disappointment with general merchandise strengthens the argument for jettisoning Argos from the group as soon as possible, Sainsbury’s is by no means in a bad shape.”
Susannah Streeter, chief investment strategist at Wealth Club, said the war in the Middle East has thrown up clouds of uncertainty for Sainsbury’s as cost pressures threaten to mount and shoppers become more cautious.
She added: “It’s the latest retailer to warn about an unpredictable outlook, and so it’s adjusted its guidance on profits for the year.
“It previously estimated underlying operating profits would come in around £1bn or more and now that’s changed to between £975million and £1.075bn.”