Sainsbury's boss says UK 'through the worst' of weak pound

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The boss of Sainsbury’s has stated the UK is “in all probability by way of the worst” of a weaker pound fuelling meals inflation.

After years of deflation, Brexit foreign money actions meant there had been a “little little bit of meals worth inflation” this yr, chief govt Mike Coupe informed the BBC.

However he stated meals costs this Christmas would nonetheless be “about the identical as they had been two years in the past”.

His feedback got here because the retailer reported a 9% fall in interim income.

Nevertheless, the decline was not as unhealthy as anticipated and gross sales rose.

The UK’s second largest grocery store chain stated income got here in at £251m within the 28 weeks to the 23 September, whereas like-for-like gross sales excluding gasoline went up by 1.6%.

It stated the autumn in income was as a result of worth slicing, wage price inflation and the consolidation of Argos.

Chief executive Mike Coupe said he was “more than happy with progress”.

‘Comparatively restricted’

The worth of sterling has fallen sharply since final yr’s Brexit referendum, pushing up the price of imports.

Initially, retailers had been protected in opposition to these elevated prices as a result of they purchase prematurely, however extra just lately they’ve felt the consequences of the foreign money devaluation.

Nevertheless, Mr Coupe stated the “affect on clients had been comparatively restricted”.

He stated the retailer was aiming to restrict worth rises, regardless of the current pick-up in inflation.

“Meals worth inflation as measured by the federal government is round 2% and inevitably the issues that we import – in order that they are usually issues like contemporary meals – get a bit of bit dearer on the again of that,” Mr Coupe stated.

“However we’re in all probability by way of the worst, if the reality be informed, and truly even as we speak’s costs are about the identical as they had been two years in the past, so we as a enterprise have carried out an excellent job of defending our clients from the extra excessive challenges of inflation and the foreign money actions.”

The grocery store chain took over catalogue retailer Argos and Habitat final yr in a £1.4bn deal.

Prior to now six months, Sainsbury’s has opened an extra 73 Argos concessions in its shops, bringing the overall to 112. It plans to have 165 by Christmas.

Mr Coupe stated: “We’ve delivered a very good efficiency throughout the group within the final six months.

“We are actually three years into delivering our differentiated technique and are seeing clear outcomes.”

Price slicing plans

Sainsbury’s is trying to make price financial savings amid fierce competitors from discounters and rising meals prices.

It says it has exceeded its price financial savings goal and may have managed to have saved £540m over the three years to the tip of the present monetary yr. It additionally plans to make an extra £500m of financial savings in the course of the subsequent three years.

Mr Coupe stated the chain was persevering with to “deal with providing our clients nice worth, supported by our removing of multibuys”.

He was additionally requested whether or not discounters comparable to Aldi and Lidl had been nonetheless making inroads into Sainsbury’s buyer base.

“We’ve at all times labored on the belief that the discounters will proceed to develop… however we’ve got deliberate our enterprise on that foundation and the best way our clients are buying is altering.

“They’re buying with us extra incessantly and you’ll see that in our comfort retailer enterprise – it is grown at eight%, they’re buying on-line, that is grown at 7% and more and more they’re buying non-food with Sainsbury’s, so for example, our clothes enterprise grew by 7%.”

‘Muted’ enchancment

The corporate stated its full-year revenue forecast remained “in line” with market expectations.

Nevertheless, Sainsbury’s share worth fell greater than three% following the discharge of the outcomes.

Molly Johnson-Jones, senior Retail Analyst at GlobalData, stated Sainsbury’s “momentum” from the primary quarter had not been maintained.

“Of all the grocers, Sainsbury’s enchancment appears essentially the most muted, and a deal with profitability have to be maintained as a way to stop additional investor discontent.”

Printed at Thu, 09 Nov 2017 13:11:36 +0000