Sainsbury’s has reported its first loss for 10 years after writing down the value of its stores, and fuel price deflation and lower fuel volumes depressed its sales.
For the 52 weeks to March 14, it made a pre-tax loss of £72m compared with a profit of £898m in the previous year.
In its accounts the company noted: “As a result of the review of our supermarket estate, we have taken an impairment charge against some of our trading stores and withdrawn from a number of schemes in our property pipeline that are unlikely to achieve an appropriate return on capital. This resulted in a total impairment and onerous contract charge of £628m which was recognised in the first half of the financial year.
Underlying pre-tax profit, which does not take account of one-off charges, was £681m, down 14.7% from the previous year’s £798m.
Underlying group sales were down 0.9% to £26.122bn, from £26.353bn the previous year.
In its results Sainsbury’s noted: “Retail sales (excluding fuel) decreased by 0.2%, with a like-for-like decline of 1.9%. This was a smaller decline than sales including fuel due to retail price deflation in fuel and lower like-for-like fuel volumes.”
Despite the slowdown in supermarket development Sainsbury’s is pressing ahead with rapid growth of its convenience store estate.
It added 98 convenience stores during the year, reaching a total of 707, and is aiming to open one to two convenience stores a week.
The convenience store business generated sales of over £2.1bn and delivered over 16% growth during the year with over seven million customer transactions each week.