Loss of Sainsbury’s records as costs of Covid and Argos skyrocket
Sainsbury’s underlying profits fell 39% to £ 356m from £ 586m
Sainsbury’s (LON: SBRY) recorded an annual loss as the cost of serving customers during the pandemic, as well as the transformation of its Argos business increased its balance sheet.
Supermarket chain FTSE 100 confirmed on Wednesday that it recorded a pre-tax loss of £ 261million for the year ending March 6, a change from pre-tax profit of £ 255million l ‘last year. The results follow £ 321million in write-downs which were largely linked to its decision to close. 420 Argos Street stores.
The group’s underlying profits fell 39% to £ 356m from £ 586m after Covid-19 costs, sickness benefits, EAR etc., amounted to £ 485 million.
Sainsbury’s announced in December that she would repay £ 440million of the corporate rate relief it received during the pandemic. It has followed similar moves from Tesco, Asda, Morrisons and Aldi and means grocers have collectively grossed more than £ 1.7 billion.
The supermarket also benefited from the huge demand for food deliveries during the pandemic, which drove online sales up 120% as it doubled its capacity to more than 850,000 online orders per week.
The supermarket expects its underlying profits to double this year to £ 620million, above the £ 586million before the pandemic. This is based on the grocer’s expectation that his high costs will come down, while his banking arm will see an increase in profitability, which should offset lower sales as customer behavior returns to normal.
“This year’s financial results were heavily influenced by the pandemic. Food and Argos sales are significantly higher, but the cost of protecting colleagues and customers during the pandemic has been high, ”said Simon Roberts, Managing Director of Sainsbury.
“Sainsbury’s was the biggest slaughterer in the FTSE after taking a big hit from Covid-related costs. Supermarkets have done a remarkable job of keeping their shelves stocked during the pandemic and increasing capacity online, but that hard work is not translating into a big increase in profits like some people might have expected.