Sainsbury's reports first-ever loss

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The Independent Online

The supermarket chain Sainsbury's slumped to its first-ever loss today after counting the cost of the restructuring needed to revive its fortunes.

The supermarket chain Sainsbury's slumped to its first-ever loss today after counting the cost of the restructuring needed to revive its fortunes.

The troubled group posted losses of £39 million in the six months to September 30, down from profits of £323 million a year earlier.

Stripping out £168 million of exceptional items, Sainsbury's achieved underlying profits of £131 million - in line with the City's recently revised expectations.

The 135-year-old group achieved a 3.5 per cent rise in sales at £8.35 billion, but took a hit of £401 million from the costs involved in the business review announced by chief executive Justin King last month.

He wants to recruit an extra 3,000 staff and get the retailer back to basics after sales slumped in the face of problems with product availability.

In total, the business review is expected to cost Sainsbury's £550 million over the financial year, with only the recent sale of US chain Shaw's helping to prop up the results. Further exceptional items of £168 million were taken in today's figures, relating in part to accounting charges.

As a result, analysts expect the chain to also post a small loss over the 12 month period.

The retailer was once the UK's biggest supermarket chain but has since been overtaken by rivals Asda and Tesco.

Despite the loss, Sainsbury's shares held firm as the company stuck by guidance on trading issued at the time of last month's business review.

Sainsbury's chairman Philip Hampton said he believed the retailer had the building blocks in place to achieve a turnaround.

He added: "We have now embarked on a sales-led recovery, which we believe will enable Sainsbury's to deliver long-term sustainable performance and profit."

Among planned changes, Sainsbury's will spend at least £400 million on product quality and place more onus on fresh food and own label products, particularly its Taste the Difference and Be Good to Yourself ranges.

Store formats will also be simplified to feature only supermarkets and convenience stores, with Central and Savacentre outlets joining the main estate.

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