Yahoo Finance COVID pushes Sainsbury's to £260m loss
Sainsbury (SBRY.L) swung to a loss in 2020 as clothing sales plunged, dragging down overall revenue, even as grocery sales boomed. Shares in the company were down roughly 1.6% on Wednesday morning.
The supermarket chain posted a statutory loss before tax of £261m ($361.8m), down from a profit of £255m a year ago, which it said “reflects one-off costs and impairments associated with strategic changes announced in November”. This including an accelerated cost saving programme.
Simon Roberts, CEO, said: “This year's financial results have been heavily influenced by the pandemic food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high. Our full year direct COVID-19 costs were £485m.”
Clothing sales took a major hit, down 8.5%. Grocery sales were up 7.8% and digital sales were up 102%.
Online groceries rose as well, making up 17% of grocery sales, up from 8%. They doubled during the year to hit £12.1bn.
General merchandise sales were up 8.3% and digital sales were up 102%, but the company said these were offset on a statutory basis by materially reduced fuel sales.
The company's board has proposed a final dividend of 7.4 pence per share, bringing full-year dividend to 10.6 pence per share, which it said reflects strong underlying cash generation.
“We are pleased to propose full-year dividend which is in line with last year, protecting shareholder income from the full impact of COVID-19 on profits," said Roberts.
“We have a bold three-year plan to put food back at the heart of Sainsburys and drive improved performance.”
READ MORE: Sainsbury's puts 1,150 jobs at risk as it seeks to boost online business
Sainsbury's underlying profit before tax was down 39% to £356m. It expects the figure for next year to be £586m, which it said was “comfortable with consensus forecasts of around £620m."
But it warned: “We have tough comparables ahead as customer behaviour normalises and we are prudent about prospects for the year.”
‘’Sainsbury rose to the challenge of helping feed the nation during lockdowns, but the costs of operating through the crisis have seriously dented its bottom line," said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown
"Sainsbury has capitalised on the accelerated shift to digital with and gaining more market share than its competitors," she said, adding that "The extent to which customer behaviour is changing now that the virus has been suppressed and restrictions on shopping have been lifted, is far from clear."
"That’s why Sainsbury, like many other retailers, views the future as uncertain."
