Business

Weak sterling weighs on Sainsbury

Firm, which purchased Argos-owner Home Retail last year, said sales were down 0.5%

Britain’s Sainsbury’s on Thursday reported a slight fall in underlying quarterly sales in its core supermarkets business and cautioned over uncertainty regarding cost pressures. Photograph: Peter Byrne/PA

Thu Mar 16 2017 - 07:20

Sainsbury‘s, Britain‘s second biggest retailer, cautioned that cost price pressures would weigh on its business this year as it reported a small decline in underlying sales over the last three months.

An almost 18 per cent devaluation of the pound versus the dollar and a 12 per cent fall against the euro since the Brexit vote is making life harder for Britain‘s supermarkets.

Sales at supermarket stores open over a year fell 0.5 per cent, excluding fuel, in the nine weeks to March 11th, the last quarter of its financial year. That compared to analysts‘ forecasts ranging down 1 per cent to up 0.3 per cent

After adjusting for this year‘s later timing of Mother‘s Day and Easter the outcome was in line with its third quarter when like-for-like sales rose 0.1 per cent, it said.

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The results showed a strong performance from Argos, where underlying sales increased 4.3 per cent, accelerating from growth of 4 per cent in the previous quarter and ahead of analysts‘ forecasts.

Analysts are on average forecasting a 2016-17 pretax profit of £578 million, which would be a third straight year of decline, despite the boost to earnings from the Argos deal. – Reuters

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