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Sainsbury’s to reveal first fall in annual profits for a decade

Year end results revealed by Sainsbury’s tomorrow are expected to show that the retailer’s annual profits fell last year for the first time in a decade after changing consumer shopping habits and the rise of the discounters took their toll on sales and margins at the UK’s third largest supermarket. Some estimates also suggest property writedowns could push Sainsbury’s into a statutory loss.

Analysts expect the retailer to post a 17% fall in underlying pre-tax profits to £660m for the year to March as a result of recent price cuts impacting on margins. The group announced prices cut worth £150m last year in effort to halt the exodus of shoppers to discounters Aldi and Lidl. Sainsbury’s Chief Executive Mike Coupe warned in March that food prices were likely to keep falling until at least the end of this year, after the company reported its fifth consecutive quarter of declining sales.

Brewin Dolphin analyst Nicla Di Palma said: “As with Tesco, management is likely to announce that 2015/16 will not bring any improvement in profitability, although we do not expect a detailed outlook.” Other analysts expect another challenging year for Sainsbury’s, hit by Tesco’s attempts at turning around its performance.


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