Tesco’s UK sales growth slows as pandemic restrictions ease

British supermarket chain Sainsbury’s (SBRY.L)forecast a big rebound in underlying profit this year after a 39 per cent fall in 2020-21 as strong food sales during the pandemic were outweighed by extra costs and a decision to forgo business rates relief.

CEO Simon Roberts said that while customers shopping more normally as restrictions ease and restaurants and bars fully open would impact sales growth in the 2021-22 year, the costs of the crisis would fall.

“Like our customers, we are all looking forward to things feeling more normal over the coming months and getting excited about a summer of celebration, but we are also cautious about the economic outlook,” he said.

The UK’s second-largest grocer after Tesco (TSCO.L), made an underlying pretax profit of 356 million pounds ($494 million) in the year to March 6, in line with guidance but down from the 586 million a year earlier.

Grocery sales rose 7.8 per cent, general merchandise sales were up 8.3 per cent and online sales doubled, but the company said it incurred an extra 485 million pounds in costs.

It also returned business rates relief offered by the government worth about 410 million pounds.

Sainsbury’s reported a statutory pretax loss of 261 million pounds, after booking 617 million pounds of exceptional charges related to a restructuring programme which Roberts detailed last November.

Sainsbury’s shares were down 2.9 per cent at 10:32 GMT, paring year-on-year gains to 21.4 per cent – gains partly buoyed by bid speculation after Czech billionaire Daniel Kretinsky increased his holding to 10 per cent. read more

Sainsbury’s three major domestic rivals – Tesco, Asda and Morrisons (MRW.L) – all enjoyed strong sales over the last year as lockdowns closed the hospitality sector for long periods and forced many people to work from home.

However, they have also had to endure the costs of additional workers, staff sick pay and in-store measures to deal with the pandemic.

This month, Tesco reported a 20 per cent drop in annual profit, while last month Morrisons reported a halving of profit. read more

Sainsbury’s said like-for-like sales, excluding fuel, rose 11.3 per cent in its fiscal fourth quarter, having increased 8.6 per cent in the third.

It said it had started the new financial year strongly and was comfortable with analysts’ consensus forecasts for 2021-22 underlying pretax profit of about 620 million pounds.