Key facts
- Sainsbury's CEO Simon Roberts called on the government not to increase business costs.
- Food inflation is not as high as previously forecast but energy and fertilizer costs may increase prices next year.
- Sales growth slowed to 1.9% in the second quarter from 3% in the first.
- Argos sales were down 1.8% and general merchandise and clothing sales down 3.4% in the half.
- Sainsbury's plans to open 10 supermarkets and 25 convenience stores by March.
Sainsbury's has warned of a "pretty challenging" market in the run-up to Christmas as households are "finding it tough" and food producers face rising costs. CEO Simon Roberts urged the government not to "further aggravate" pressure on costs for business in this month’s budget, citing the impact of business rates and employers’ national insurance contributions.
Roberts believes the government is listening to business, particularly on job creation for young people. He noted that food inflation is not at the high levels forecast earlier in the year, but high energy and fertilizer costs could push up food prices next year. He also called for increased tax breaks to support investment in farm technology to improve food resilience.
Shares in Sainsbury's fell 3.7% after the retailer revealed slower than expected sales growth of 2.6% in the six months to September 12, with growth halving to 1.9% in the second quarter. Strong online grocery sales and premium own-label Taste the Difference range helped growth. Sales slowed as shoppers focused on the cost of living and cut spending on clothing and big-ticket items.
Pre-tax losses widened to £63 million from £14 million a year earlier. However, underlying profit rose 5.2% to £366 million, excluding the Argos business, which is being sold off. Sainsbury's now expects annual underlying profit of at least £1.02 billion.