The supermarket revealed an 8% fall in first-half profit as it said it had invested to keep prices as low as possible with food price inflation in its stores running “comfortably below” the 10% plus that reported for the wider market. The supermarket said its drive to cut costs by £1.3 billion in the three years to 2024, double the savings in the three years to 2020 and a step up from the figure set last year, helped offset “higher than expected operating cost inflation”. Simon Roberts, chief executive of Sainsbury’s, suggested there would be more price rises next year as he said there was still “pressure on the system” from increases in energy and labor costs. He said shoppers had already made it clear they were “really feeling the pinch”, putting fewer items in their baskets, switching to cheaper own-label products – which he said could be half the price of similar branded items – and shopping earlier than usual for Christmas products so that they can spread the cost over several payment packages. Roberts added that as autumn arrived, shoppers had also turned to “eating at home rather than restaurants”. Sales of the retailer’s Taste the Difference premium food ranges rose 14% on pre-pandemic levels as analysts said Sainsbury’s was getting sales from households saving money by looking after themselves at home rather than eating out. Roberts expects the trend for eating at home to continue in the coming weeks with gatherings to watch the soccer World Cup in homes rather than pubs. He said: “We really understand how difficult it is for millions of households at the moment. Customers watch every penny and every pound and we know they rely on us to keep food prices as low as we can. “We will have invested more than £500m by March 2023 to keep prices lower by reducing our costs at a faster rate than our competitors, meaning we have more firepower to tackle inflation. Over the last year and a half we’ve consistently passed on less price inflation than our competitors and I’m confident we’ve never had better value.” He said it was too early to say how general merchandise sales at the group’s Argos chain would fare in the run-up to Christmas, but the company had decided to keep 60 more stores than previously expected after renegotiating rents. The group now aims to have 160 standalone stores by March 2024 and up to 460 within its supermarkets. Subscribe to Business Today Get ready for the business day – we’ll point you to all the business news and analysis you need every morning Privacy Notice: Newsletters may contain information about charities, online advertising and content sponsored by external parties. For more information, see our Privacy Policy. We use Google reCaptcha to protect our website and Google’s Privacy Policy and Terms of Service apply. The UK’s second-largest supermarket chain said underlying pre-tax profit fell to £340m, better than the City had expected, as sales rose 4.4% to £16.4bn in the six months to on September 17. Grocery sales rose 3.8% in the final quarter of the half year compared to the same period last year, while Argos sales rose 1.6% compared to a 10.5% decline in the first quarter. Sainsbury’s said it was seeing less switching to Aldi and Lidl than all other brick-and-mortar supermarkets and that while online sales were down, those shoppers were returning to its supermarkets. The retailer was expected to cut annual profit forecasts from a target of £630m to £690m. But analysts said Sainsbury’s had better-than-expected sales and earnings with outperformance in all categories, including clothing, whose sales fell just 0.2% in the second quarter, compared with a year ago, and overall merchandise, where sales rose 1.2% helped by strong sales of fans and other warm-weather gear.
