Sainsbury's profit hit by property charges and supermarket wars

Britain's number two supermarket posted first losses for a decade

Sainsbury's chief executive Mike Coupe (STAFF/Reuters/Corbis)

Sainsbury's posted a pretax loss of £72 million for the year to the end of March following one-off charges of £753 million, including earlier flagged impairment charges on property.

Stripping out those costs, the grocer made underlying pretax profit of £681 million, ahead of analysts expectations but almost 15% lower than the £798 million it made a year earlier.

Analysts were nonetheless positive about the results, comparing them to the disastrous 'kitchen sink' efforts by Tesco in recent weeks. "There are no significant additional negatives in Sainsbury’s final 2014 figures of the kind that Tesco decided to load its own finals with, and that, by default is a positive for the no. 2 supermarket chain," said Ken Odeluga, analyst at City Index.

The decline follows a period of food price deflation and an industry price war as it and rivals Tesco, Morrisons and Asda fought back against the rise of discounters like Aldi and Lidl.

“The UK marketplace is changing faster than at any time in the past 30 years which has impacted our profits, like-for-like sales and market share,” said chief executive Mike Coupe.

“However, we are making good progress with our strategy, and our investment in price and quality is showing encouraging early signs of volume and transaction growth.”

Coupe had previously laid out plans to respond to the changing competitive environment, which included price cuts, new convenience stores and spending cuts at bigger stores.

The chain has also axed hundreds of jobs as part of a store structure overhaul and trimmed its IT staff.

Investors were also warned of cuts to the dividend. Today Sainsbury's said it would pay a full-year dividend of 13.2p per share, down 23.7%.