Sainsbury’s warns of ‘unprecedented times’ for consumers

Mike Coupe is the chief executive of Sainsbury's

He added: "Sainsbury's admits that consumer uncertainty will make the crucial second-half hard, and that clothing is fiercely competitive".

The comments came as Sainsbury's reported a 40% slump in bottom-line profits to £132 million for the six months to September 22 after a raft of costs, including store restructuring and expenses related to its planned £12 billion merger with Big Four rival Asda.

The supermarket chain also warned that the consumer outlook remained "uncertain" as it heads into the crucial Christmas trading period, adding that the market remained "highly competitive and very promotional".

Sainsbury's said like-for-like sales growth including Argos, but excluding fuel, rose 0.6%.

Sainsbury's chief executive Mike Coupe noted in today's statement that the group continued "to engage constructively" with the Competition and Markets Authority which is now conducting its in-depth Phase Two review into the group's proposed merger with Asda. The strong set of results shows that the company's growth strategy is working at a time when the company is facing pressure on general merchandising margins and a rapidly changing consumer market.

Sainsbury's £7.3 billion tie-up with rival Asda is now being reviewed by the UK Competition and Markets Authority (CMA), with the regulator raising concerns that consumers could face higher prices and a poorer quality of service due to geographical overlap of stores in key locations.

He added: "Its enhanced profits can, in a large way, be put down to the integration of Argos, which Sainsbury's said has been delivered nine months ahead of schedule and has realised £160m in cost savings - by many measures, it can be deemed a success".

Clothing sales also fell 1% in the first half due to changes in promotions.

Sixty Argos stores were opened in Sainsbury's supermarkets in the half, bringing the total to 251.

However, the firm said it remained on track to meet analysts' average pretax profit forecast for its 2018-19 financial year of £634 million ($832 million), up from £589 million made in 2017-18.

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