Business rates relief snub costs Sainsbury’s £400m as profit slumps despite lockdown sales boost
The last year saw most Brits spend up large at the supermarket, but despite a sales boom Sainsbury’s first quarter profit has slumped because it chose to say no to business rates relief.
Sainsbury’s, the UK’s second largest grocer after Tesco , said it made an underlying pretax profit of £356m in the year to 6 March, down 39 per cent from £586m the year before.
The group declined business rates relief offered by the government worth about £410m
Grocery sales rose 7.8 per cent and general merchandise sales increased 8.3 per cent but the company said it incurred an extra £485m in costs due to the crisis.
However, Sainsbury’s is expecting a swift return to better days, and now expects pre-tax profit for the current year to jump to £620m.
Chief executive Simon Roberts also revealed that despite Covid-19 costs jumping, the supermarket will still pay out a dividend of 7.4p a share, up from 7.3p a share a year ago.
“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.”
That did little to boost shares though, which were trading down 2.2 per cent at the open to 236p.
Roberts added: “This year’s financial results have 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”.