Sainsbury’s chief executive Simon Roberts has urged the Labour government to avoid repeating previous Budget measures that increased costs for businesses, warning that further rises in taxes and employment expenses could add pressure to retailers already navigating stretched household finances.
Roberts said he believed ministers were listening to business leaders after talks at Downing Street last week, but called on John Healey, the Chancellor, to use next Wednesday’s autumn Budget to address the pressures facing employers rather than impose another round of significant cost increases.
“I think this Government is listening to business,” Roberts said. “We’ve had the opportunity to meet with figures from Government and stress that it is really important we don’t see a repeat from previous budgets.”
The intervention from the head of Britain’s second-largest supermarket group comes as retailers prepare for a critical Christmas trading period, with consumers still sensitive to prices and businesses weighing the cumulative impact of higher operating costs.
Roberts urged ministers to reform the business rates system, encourage companies to hire and increase capacity rules linked to investment in farming. His comments underline the tension facing the government as it seeks to balance public finances with employers’ demands about the cost of running their businesses.
“Many households are finding things tough at the moment,” Roberts said, highlighting the continued strain on consumers’ budgets.
Sainsbury’s has sought to attract shoppers through value-focused initiatives, including its Nectar Prices loyalty scheme and Aldi Price Match, which compares prices on selected products with those of the discount grocer. The company said these measures had helped draw more customers as grocery inflation slowed during the first half of its financial year.
The retailer on Thursday raised its profit outlook after reporting stronger grocery sales, offering evidence that its food business has continued to perform despite pressure on household spending.
Total revenue rose 4.1 per cent to £16.2bn in the 28 weeks to September 12 compared with the same period a year earlier. Sales from continuing operations excluding fuel increased 2.6 per cent, while grocery sales climbed 2.9 per cent to £13.2bn.
Underlying operating profit increased 3.6 per cent to £525mn.
Sainsbury’s said it was now on track to deliver underlying operating profit of between £1.025bn and £1.065bn for the year. Its previous guidance range of £975mn to £1.075bn was adjusted to reflect the proposed sale of Argos, with the retailer indicating a comparable range of £965mn to £1.065bn.
The performance was less encouraging in general merchandise, which includes its Tu clothing brand. Sales fell 3.4 per cent as the group reduced selling space in stores and contended with what it described as a “subdued clothing market”.
Fuel sales, by contrast, rose 17.8 per cent over the half-year, following a jump in prices linked to higher global oil costs after the Iran war.
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