The papers manage to find room to squeeze in reports of Sainsbury’s latest results amid all the coverage of the US presidential election. Sainsbury’s first-half profits dropped for third consecutive year as it fights for online shoppers and battles on in the supermarket price war, says The Mail. The Telegraph writes that CEO Mike Coupe defended the £1.4bn Argos acquisition saying he was “more confident than ever” in the takeover despite falling profits and rising concerns that the deal had made the grocer more vulnerable to a lower sterling.
Other papers focus on the ongoing discussions over who should bear the brunt of rising input costs. Coupe has warned its leading suppliers, whose “profits are substantially higher than ours”, that they should be wary of putting up prices in the wake of Brexit, The Times writes. The chief executive said major suppliers should be taking the hit on any cost increases resulting from the falling value of the pound, rather than trying to pass on price rises to retailers and shoppers (The Guardian).
Pre-tax profits for the first half fell nearly 10% to £372m and underlying pre-tax profits, adjusted to exclude certain costs such as synergies, came in at £277m, down 10% year on year and lower than the average £282m forecast by analysts, The Financial Times reports. However, The Financial Times Lex column points past the doom and gloom and focuses on the potential provided by the Argos deal. “And yet through its acquisition of Home Retail, Sainsbury’s has a lever to pull its rivals do not: cost synergies. The supermarket said it remains on track to deliver £160m in annual savings in three years. Stripping out less certain merger revenue benefits (£15m), the savings would raise projected full-year operating profits by roughly a fifth, allowing the group to maintain its two times dividend cover. In a grocers’ market characterised by anaemic margins and falling profitability, that is the equivalent of winning big.”
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