Sainsbury’s warns of tough Christmas as households curb spending
Sainsbury’s chief executive Simon Roberts expects a “pretty challenging” run-up to Christmas as households limit spending and food producers face rising costs. He urged the government not to add to business costs in next week’s budget, and said high energy and fertiliser prices could push food prices up next year.
The supermarket’s sales grew 2.6% in the six months to 12 September, slowing to 1.9% in the second quarter; its shares fell 3.7% after the results. Online grocery sales rose 9% and premium Taste the Difference sales increased 6%, while Argos sales fell 1.8% and general merchandise and clothing sales dropped 3.4%. Underlying profit rose 5.2% to £366m, excluding Argos, and Sainsbury’s raised its annual profit forecast to at least £1.02bn.
In short
- Sainsbury’s expects a tough Christmas trading period.
- Sales growth slowed to 1.9% in the second quarter.
- Annual underlying profit forecast rises to at least £1.02bn.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Sainsbury’s warning highlights the pressure households and food producers face from high living costs and input prices. Keeping the budget from adding to business costs could help protect investment, jobs and supply, while easing the risk that higher costs feed through to food prices.
The case against
Government action to raise business costs may be justified if it funds public services or supports workers and households facing the same pressures. Supermarket profits and a higher annual forecast also leave room to question whether warnings about costs should be met with restraint before the effects on prices, investment and employment are clear.
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Originally published by The Guardian as “Sainsbury’s expects challenging run-up to Christmas as households feel squeeze”.