Sainsbury’s sees boost from Argos takeover

Sainsbury’s says its latest half-year results have been boosted by its takeover of catalogue retailer Argos.

Adding Argos stores in Sainsbury’s outlets was “driving an increase in trading intensity”, the retailer said.

The UK’s second largest supermarket, which is planning to merge with rival Asda, said half-year underlying profits rose 20% to £302m.

However, when a host of exceptional costs are taken into account, profits nearly halved.

Standard pre-tax profits for the 28 weeks to 22 September were £132m, compared with £220m a year earlier.

The profit figure was pushed down by costs related to restructuring store management teams and preparing for the Asda deal, which is being examined by competition authorities.

Like-for-like sales growth for the period – which strips out the impact of new retail space – was 0.6%, which disappointed analysts.

‘Pleasing’ results

Sainsbury’s chief executive Mike Coupe said the grocery market was “extremely competitive”.

He told the BBC’s Today programme: “It’s a pleasing set of results against a difficult market backdrop, largely driven by the acquisition synergies from the Argos business.”

Julie Palmer, partner at Begbies Traynor, said: “The purchase of Argos has been a well-crafted tactical decision to draw greater footfall into its stores and reduce cost savings measures, with 90 Argos units expected to be opened in stores this financial year.

“However, there is still uncertainty around its merger with Asda, with the regulators yet to give the thumbs-up to the deal.

“That, coupled with Amazon’s acquisition of Whole Foods offering a new online competitor, [means] Sainsbury’s cannot rest on its laurels and must continue to innovate and adapt to the needs of its customers.”