Sainsbury’s profits almost wiped out over store closures

Sainsbury’s profits have almost been wiped out after being hit with costs over store closures in the first half the year.

The store said in September they will close some stores and Argos outlets and bring the brand into their supermarkets.

Pre-tax profits fell to £9m compared to £107m in the same period the previous year, like-for-like sales dropped by 1%.

In the 28 weeks to 21 September, store closures resulted in a £203m charge for the half year results.

In the same period last year underlying pre-tax profits reached £238m, down from £279m, in line with forecasts.

Richard Lim, chief executive of Retail Economics said, “The sharp fall in profits may well reflect the phasing of cost savings, but blaming the weather and higher marketing expenses suggests there is significant pressure on profit margins bubbling under the surface.

“There’s no getting away from the fact that sales fell across all parts of the business reflecting tough market conditions.

But he said: “The integration of Argos appears to be progressing well. It offers a truly attractive proposition for customers who increasingly bounce across physical and digital channels, often at the same time.”