Sainsbury's puts on brave face after swinging to annual loss, shares fall
Supermaket group Sainsbury's has swung to its first annual loss in a decade and slashed its dividend by nearly a fifth following a hefty property impairment charge and a continued slump in sales.
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Results came in slightly better than the market had feared and management painted an optimistic outlook for the business, but that didn't stop the stock from falling on Wednesday morning.
Statutory results showed a loss before tax of £72m in the year ended 14 March, compared with a profit of £898m the year before, mainly as a result of a £628m impairment taken in the first half.
Read more: Kantar data shows Sainsbury's performs best as Big Four all lose market share
A review of the supermarket estate saw the company write down the value of a number of assets and withdraw from a number of schemes in the property pipeline.
Excluding this and other restructuring charges, the grocer reported an underlying pre-tax profit of £681m for the period, down 14.7% on the previous year. Underlying basis earnings per share declined 19.5% to 26.4p.
The company proposed a full-year dividend of 13.2p per share, down 23.7% on the 17.3p paid out the year before. Analysts had expected the payout to be slashed to 12.54p.
Group sales were down 0.7% at £23.78bn, while like-for-like sales including fell 1.9%.
The company's share of the market fell 25 basis points to 16.5% over the year on the back of a more competitive landscape for the grocery market, as consumers change their shopping habits amid strong growth from discounters such as Aldi and Lidl.
Nevertheless, chief executive Mike Coupe said the company was making "good progress" with its strategy, "and our investment in price and quality is showing encouraging early signs of volume and transaction growth".
"Sainsbury's is a fantastic business, run by an experienced management team, supported by great colleagues and underpinned by strong values. I believe we are taking the right decisions to ensure we remain fit for the future and are able to capitalise on our many growth opportunities," he said.
Analysts react
Retail analyst Nick Bubb said the results were as expected "but there don’t appear to be any new write-offs and despite the 15% fall in underlying profits management make brave noises about the outlook".
Accendo Markets' Augustin Eden took a more gloomy outlook, saying that the group's spending cuts and dividend reduction "will do little to recoup the firm’s losses or boost the mood of investors".
"With the monster weekly shop swiftly morphing into the daily visit to the local grocer (or curry house), a considerable re-balance is occurring in the market. Where it will settle next is anyone’s guess," he said.
The stock was down 2.6% at 268p by 09:33, having quickly erased earlier gains which sent it to a high of 279p.