Sainsbury’s has reported a 4% growth in total convenience sales, helping to drive a 0.6% increase in overall like-for-like grocery sales in the six months to 22 September.
However, Sainsbury’s pre-tax profits dropped 40% to £132m, compared with £220m a year earlier, which it attributed to costs relating to the Argos integration and proposed merger with Asda.
But underlying profit grew by 20% to £302m, after delivering “significant Argos synergies ahead of schedule”. Total retail sales grew by 1.2%.
Sainsbury’s chief executive, Mike Coupe, said: “The market remains very competitive and we are transforming our business to meet rapidly changing customer needs. We have fundamentally changed how our 135,000 Sainsbury’s store managers and colleagues work and I would like to thank them for their ongoing hard work through this period.
“We have delivered a solid first half performance and profit has increased because we have delivered significant Argos synergies ahead of schedule. Sales of food and general merchandise were boosted by the hot summer, but general merchandise margins remain under pressure.
“Our strategy of offering customers a distinctive range of high quality and great value food has driven like-for-like sales growth at Sainsbury’s. Where we have invested to lower prices, volumes and transactions have increased.”
Results have been boosted by its takeover of catalogue retailer Argos, with 60 Argos stores opening in Sainsbury’s supermarkets in the half, bringing the total to 251, with a further 233 order collection points in supermarkets and convenience stores.
Meanwhile Sainsbury’s potential merger with Asda, which would see more than 2,800 Sainsbury’s, Asda and Argos stores trade under one combined business, could see reduced prices, he said.
Coupe added: “Our proposed combination with Asda will create a dynamic new player in UK retail, with the ability to further lower prices and to reduce the cost of living for millions of UK households. The Competition and Markets Authority is conducting its in-depth Phase Two review into the proposed combination and we continue to engage constructively with the CMA and Panel.”