Britain‘s Sainsbury’s warns of lower profit as inflation hits

div classBodysc17zpet90 cdBBJodivpBy James Daveyp

pLONDON Reuters British supermarket group Sainsburys followed market leader Tesco in warning that soaring inflation would lower profit in the current financial year, taking the shine off a more than doubling of annual profit.pdivdivdiv classBodysc17zpet90 cdBBJodiv

pSainsburys said on Thursday its underlying profit before tax in 202223 was expected to be between 630 million pounds and 690 million pounds 789864 million.p

pThe group made underlying profit before tax of 730 million pounds in the year to March 5, 2022, benefiting from lower COVID19 costs, while analysts on average had expected 703 million pounds for 202223.p

p“The year ahead will be impacted by significant external pressures and uncertainties, including higher operating cost inflation and cost of living pressures impacting customers disposable incomes,” Chief Executive Simon Roberts said.p

pShares fell 3.7 in early trade, underperforming the wider market, and adding to a fall of 13 so far this year.p

pAlready this month, Tesco, No. 4 player Morrisons and No. 7 the Cooperative Group have all warned on the outlook as a cost of living crisis and supply disruption due to the war in Ukraine weigh on the grocery sector.p

pSurging prices are causing the biggest squeeze on UK household incomes since at least the 1950s and consumer confidence is at near record lows.p

pAnalysts see Sainsbury‘s as more challenged than other supermarket groups because of its ownership of the Argos general merchandise business – a subsector more exposed to pressure on consumers’ disposable income.p

pSainsburys revenue rose 2.9 to 29.9 billion pounds in 202122. Likeforlike sales, excluding fuel, fell 2.3. They fell 5.6 in the fourth quarter, having fallen 4.5 in the third quarter.p

pGeneral merchandise sales slumped 21.1 in the fourth quarter, having fallen 16 in the third.p

pBritains inflation rate hit a 30year high of 7 in March and is expected to peak at nearly 9 later this year. Food inflation hit 5.9 in April, according to industry data. p

pSainsburys said it continued “to inflate behind competitors on the products customers buy most often,” and last week lowered prices across 150 of its highest volume fresh products.p

pOn Monday, both No. 3 player Asda and Morrisons said they were cutting prices on essential items.p

pSainsburys is paying a full year dividend of 13.1 pence, up 24 and has committed to increase its dividend payout ratio to around 60.p

p1 0.7988 poundsp

p Reporting by James Davey, Editing by Paul Sandle, Michael Holden and Barbara Lewisp

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