Sainsbury's predicts £500 MILLION loss in profits despite coronavirus panic-buying

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Sainsbury's predicts £500 MILLION loss in profits despite coronavirus panic-buying 1

Sainsbury’s said profit would be hit by significant costs associated with social distancing and safety measures to protect customers and staff, weaker sales of fuel, general merchandise and clothing, and lower financial services profitability despite surging grocery trade as the coronavirus pandemic takes hold. The retail giant said the impact of COVID-19 is expected to leave underlying pre-tax profits broadly flat for the year to March 2021, despite £450million in business rates relief.

It has scrapped its final shareholder dividend and said decisions on further payouts would be deferred until later in the financial year – a decision which comes after rival Tesco faced criticism for paying out £635 million.

Sainsbury’s full-year results showed a 2 percent fall in underlying pre-tax profits to £586 million for the year to March 7.

On a statutory basis, pre-tax profits rose to £255 million from £202 million the previous year.

Sainsbury’s base case assumes that lockdown restrictions would have eased by the end of June, but that the business would continue to be disrupted until mid-September. It also assumes that consumer demand, particularly for general merchandise and clothing, would be impacted by weaker economic conditions thereafter.

Presenting his last set of results before bowing out on May 31, chief executive Mike Coupe said the past few weeks had been an “extraordinary time for our business”.

He said: “This is an unsettling time for everyone, but I am incredibly proud of the way the business has responded, continually adapting and responding to customer feedback.

READ MORE: Martin Lewis’ supermarket money saving method revealed 

Total grocery sales jumped as much as 48 percent higher in the week to March 21 as shoppers stockpiled ahead of the lockdown.

But total clothing and general merchandise sales, excluding at Argos, have suffered amid the lockdown, tumbling 53 percent and 22 percent respectively in the seven weeks to April 25.

The impact on its Sainsbury’s Bank financial services arm and weaker fuel sales, as well as the cost of measures to protect staff and customers, is expected to hit its bottom line.

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