Sainsbury’s profit down 39 per cent as Covid-19 costs offset strong sales

Sainsbury’s on Wednesday reported a 39 per cent fall in full year underlying pre-tax profit to £356 million as strong food sales during the pandemic were outweighed by extra costs and the forgoing of business rates relief.

Grocery sales were up 7.8 per cent, general merchandise sales up 8.3 per cent and digital sales up 102 per cent, but the direct Covid-19 costs stood at £485 million.

“This year’s financial results have been heavily influenced by the pandemic. Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high,” Simon Roberts, chief executive, said.

“We have a bold three-year plan to put food back at the heart of Sainsbury’s and drive improved performance. We are transforming the way we work and I am encouraged by how all of our teams have responded and the early momentum and performance towards our plan.”

The group revenue stood nearly flat at £29 billion, and the company reported statutory loss before tax of £261 million, predominantly reflecting one-off costs and impairments associated with strategic changes announced in November.