Sainsbury's profits fall, despite strong Argos performance

Sainsbury's PLC has reported overall growth in 52 week sales, although profits fell amid what they've described as a 'pivotal year' for the group.

According to its preliminary results for the 52 weeks ending 11th March 2017, total sales increased 12.7% to £29,112m, up from £25,829m last year, with Argos making solid progress since its takeover.

However, despite the growth, underlying pre-tax profit fell by 1% from £587m last year to £581m, due to an increasingly competitive market and the growing impact of cost price pressures.

Download the Sainsbury's financial statement here.

Argos continues to deliver impressive results, with sales increasing by 4.1%, with like-for-like sales at Argos stores in Sainsbury’s supermarkets, that have been open for more than one year, growing by between 20-30%. Sainsbury’s confirmed that it has now opened 59 Argos stores in Sainsbury’s supermarkets and 207 digital collection points, with plans to accelerate its ambition to open 250 Argos Digital stores by the end of 2019.

The group also stated that it expects to deliver £160m EBITDA synergy target six months early, as well as confirming that it expects to transform 60 Argos high street stores in 2017/18 to the new digital format, bringing over one third of the Argos store estate under the new digital concept in a year’s time.

Argos Digital sales were largely driven by Online participation with 53% representing the platform, whilst mobile also grew 60% this year.

Mike Coupe, chief executive of J Sainsbury plc, said: “This has been a pivotal year and we have made significant progress delivering and accelerating our strategy. We are well placed to navigate the external environment and we remain focused on delivering our strategy.”

Download the preliminary results presentation here.

Last year, Sainsbury’s acquired Argos-owned Home Retail Group in deal worth £1.4bn to expand its non-food offering within its stores, combining both Argos and Habitat as one ‘Multi-channel, multi-product retailer’.

Source: Insight Team

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