Sainsbury’s set to report profits decline

Sainsbury's is feeling the pain of a highly compeitive retail sector
Sainsbury's is feeling the pain of a highly compeitive retail sector

Sainsbury’s is expected to post its first annual profits fall in a decade this week, with boss Mike Coupe braced for more pain as a result of ongoing supermarket price wars.

The City predicts that the UK’s third biggest grocery chain, which has 597 supermarkets and 707 convenience stores, will post a 17 per cent decline in full-year pre-tax profits to £659 million as sales fall and margins come under pressure.

It recently posted a fourth quarter 1.9 per cent decline in like-for-like sales for the 10 weeks to March 14, compared with a fall of 1.7 per cent in the previous quarter.

Earlier this month, the retailer said it would cut 800 department manager and night shift jobs as it becomes the latest supermarket to restructure its operations in the face of tough trading conditions.

Britain’s big four grocers - including Tesco, Morrisons and US-owned Asda - are engaged in fierce competition as they scramble for market share, which is being eaten away by discounters Aldi and Lidl.

Last month Mr Coupe said: “Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue.”

The full-year results will be the first under Mr Coupe since he succeeded Justin King, who stepped down last year after a successful decade in charge.

Analyst Clive Black said: “Sainsbury’s has seen a considerable deterioration in its absolute and relative trading performance through 2014/15, which leaves us concerned about its scope to deliver growth in the medium term.”