Sainsbury’s loses £261m because of high covid costs

Sainsbury’s has reported an annual loss of £261 million, despite strong grocery sales.

The supermarket retailer attributed the decline to £485 million worth of direct coronavirus-related costs, which was spent on “keeping colleagues and customers safe during the pandemic.”

The company saw annual pre-tax underlying profits slump by 39 per cent to £356 million.

Sainsbury’s chief executive, Simon Roberts, said that the chain’s financial results had been heavily influenced by the pandemic.

“Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high,” said Roberts. “Our full-year direct COVID-19 costs were £485 million, leading to a 39 per cent decrease in full-year underlying profit. We are pleased to propose a full-year dividend which is in line with last year, protecting shareholder income from the full impact of COVID-19 on profits.”

The company did however report improved online grocery sales across the year.

"We have accelerated our digital transformation this year as we focus on serving customers however they want to shop with us,” said the chief exec. “We have more than doubled our online grocery sales and have done this while improving profitability. Argos digital sales grew almost 70 per cent and our Argos transformation plan is on track to improve customer availability while reducing our costs.”

Despite the decline in profits, the chief executive announced a bold three-year plan that will focus on food.

Sainsbury’s said that with a strong cash performance for the year and confidence in underlying cash generation, it now expects to reduce net debt by at least £950 million across the four years to March 2023 against a previous guidance of £750 million.

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