Sainsbury's warns over 'challenging' trading as profits dip to £503m
Supermarket Sainsbury's has cautioned over "challenging" trading and ongoing price pressures as it posted an 8.2% fall in annual profits.
The chain reported pre-tax profits of £503 million for the year to March 11, down from £548 million the previous year.
Profits fell 1% on an underlying basis to £581 million as it sought to keep prices low amid cost pressures from the Brexit-hit pound, which offset a £77 million boost from the recently bought Argos chain.
The group said the market remains "competitive and the impact of cost price pressures remains uncertain", with like-for-like supermarket sales down 0.6% over the year.
But Sainsbury's chief executive Mike Coupe said its food business remained "resilient in a challenging market".
He added: "This has been a pivotal year and we have made significant progress delivering and accelerating our strategy."
Group sales, including VAT, surged 12.7% thanks to a robust contribution over the final six months from the Argos business, which the group bought when it acquired Home Retail for £1.4 billion last year.
Sainsbury's said it made cost savings of £130 million as part of a three-year target to cut £500 million by the end of 2017/18.
It also outlined aims to slash costs by another £500 million in the next three years.
Mr Coupe said the group was "pleased" with its progress so far since snapping up Argos, having already opened 59 Argos Digital stores in its supermarkets, which it said were performing well.
It is also ramping up plans to open 250 Argos Digital stores, the group added.