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Friday, May 09, 2025

Sainsbury's sees fall in pre-tax profit as it reveals how much spent to 'keep prices low' during cost of living crisis

Sainsbury's sees fall in pre-tax profit as it reveals how much spent to 'keep prices low' during cost of living crisis

The supermarket says it is "absolutely determined to battle inflation" for its customers.
Sainsbury's has reported a fall in its pre-tax profit, as it reveals it has spent more than £560m on "keeping our prices low over the last two years".

The supermarket chain said that in the year ending 4 March, its group sales were up 5.4% to £35.15bn, but underlying profit before tax was £690m - down from £730m at the same time last year.

Chief executive Simon Roberts said: "We really get how tough life is for so many households right now which is why we are absolutely determined to battle inflation for our customers.

"Our focus on value has never been greater and we have spent over £560m keeping our prices low over the last two years.

"As a result, we are now the best value compared to our competitors that we have been in many years and we are delivering improved market share performance in Sainsbury's and Argos."

He said that in the past 12 months the company had invested £225m on measures for its workers, including three pay rises.

A further £66m was used as additional help for British farmers, he said, adding: "I am grateful for their support in what has been another difficult year for food supply chains.

"We made these very deliberate decisions and investments because they make our business stronger, but more importantly because they are simply the right thing to do."

The words echo those of Pret a Manger chief executive Pano Christou who, yesterday, told Sky News that he would "continue to look after our people and our customers", despite warnings from the Bank of England about inflation.

Mr Roberts said on Thursday: "While there is still much to be done and there is no doubt that the year ahead will remain challenging, I'm confident we will continue to deliver for our customers, colleagues, communities and shareholders."

'However you slice it, the landscape is very tricky'

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "Attracting customers with low prices now could be the right move for the long-term as it can encourage switching from rivals.

"However, the degradation in margin can't go on forever and profits are already feeling the pinch.

"Cash flow is in a healthier position thanks to a reversal of COVID disruption, which helps to underpin efforts as the battle of the big four continues.

"However you slice it, the landscape is very tricky.

"The huge pullback in spending in general merchandise shows the extent of consumer nerves, and the penchant for lower-priced grocery items needs to be short lived if Sainsbury's is going to be able to lift the margin ceiling it's currently enforced on itself."

Sainsbury's figures show that comparable grocery sales rose 7.4% in the latest quarter, boosted by food price inflation, while Argos sales jumped 9.3%.

Food price inflation hit the highest level for more than 45 years, at 19.1% in the year to March, according to official data, but figures from Kantar this week signalled a slight easing in April, to 17.3%, from last month's 17.5%.

Sainsbury's shares were down marginally in morning trading.
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