Sainsbury’s warns of £500m coronavirus hit

Sainsbury’s warned of a coronavirus hit of more than £500 million to the current year’s profits as it said social distancing measures together with falls in clothing and fuel sales would offset surging grocery trade.

The retail giant said the impact of Covid-19 is expected to leave underlying pre-tax profits broadly flat for the year to March 2021, despite £450 million in business rates relief.

It has scrapped its final shareholder dividend and said decisions on further payouts would be deferred until later in the financial year – a decision which comes after rival Tesco faced criticism for paying out £635 million.

Sainsburys boss Mike Coupe quits
Sainsburys boss Mike Coupe quits

Sainsbury’s boss Mike Coupe is leaving on May 31 (Sainsbury’s/PA)

Sainsbury’s full-year results showed a 2% fall in underlying pre-tax profits to £586 million for the year to March 7.

On a statutory basis, pre-tax profits rose to £255 million from £202 million the previous year.

It saw total grocery sales jump 12% in the seven weeks to April 25, compared with a 2% rise in the final quarter of its previous financial year.