Sainsbury's has warned that it expects the market to remain competitive for the "foreseeable future" after posting a near 14pc fall in annual profits due to the cost of the intense supermarket price war. The grocer, which is buying Argos owner Home Retail Group for £1.4bn, reported a fall in underlying pre-tax profits to £587m from £681m for the year to March 12, which it blamed on falling food prices. Mike Coupe, chief executive, said that food prices had fallen by almost 4pc over the past few years while deflation had persisted at a rate he said he "hadn't seen in my 30 year career in retail". Sales slipped by 1.1pc to £25.8bn as Sainsbury's continued to battle its "Big Four" rivals and sprawling discounters Aldi and Lidl. Like-for-like sales dipped by 0.9pc during the year. On a statutory basis, which includes pension, property and one-off costs, the supermarket swung back into the black , reporting £548m of pre-tax profits, compared to a £72m loss last year. However, Sainsbury's has lowered its final dividend from 8.2p to 8.1p, meaning investors' total pay-out has fallen 8.3pc to 12.1p. Despite beating estimates Sainsbury's shares were down by over 5pc to 270.8p in mid-morning trading.
Sainsbury's has posted a nearly 14% fall in underlying pre-tax profits, from £681m to £587m in March YoY. Cost of the intense supermarket price war, falling food prices and deflation contributed to the decline. Sales fell 1.1% to £25.8bn and like-for-like sales were down 0.9% during the year. Asda performed the worst of the 'Big Four' supermarkets with a 5.1% drop but Aldi and Lidl increased sales by 12.5% and 15.4% respectively.