Sainbury’s interim results revealed that the failed Asda merger had been a distraction to the core business with profits significantly down (albeit appearing worse due to one off costs). Despite this it was positive to see a renewed focus on improving margins and investment in core supermarkets.
Key takeways:
- Sainsbury’s profits down but heavily impacted by £203m of one off costs recognised in H1 due to store rationalisation program
- Signs of refocus post merger distraction with good improvement in Q2 sales over Q1.
- Online sales strong with growth of 7% in H1
- Net debt reduced by £568m as part of commitment to reduce debt by at least £750m in the next 3 years.
- Significant investment planned into 450 supermarkets in FY19/20. 172 were completed in H1
- Continuing to improve margins through digitisation. Smart Shop self scan now in over 350 supermarkets. 176 Argos stores converted to digital in H1 offering fast track home delivery and click and collect
- Anticipated £500m cost reduction over 5 years from further integrating Sainsbury’s and Argos
