Group sales, including VAT, for the 2016/17 period were healthier than the year prior, growing 12.7% to £29bn, though, this was largely the result of the Argos contribution.
Argos, which has one of the most frequently visited retail websites in the UK, added £3.2bn in sales (including VAT) to Sainsbury’s total and £77m of underlying profit before tax, since its parent company, Home Retail Group, was bought by Sainsbury’s.
Already, 59 Argos digital stores and 207 digital collection points have been introduced into Sainsbury’s own supermarkets, resulting in a 2% uptick in supermarket sales where there is an Argos digital store present.
As such, it plans to accelerate its plans to open 250 of these digital stores and also expects to deliver its £160m EBIDTA synergy target six months’ ahead of schedule.
But the “competitive and uncertain trading environment” took its toll on the group’s profit margin.
Retail underlying operating profit fell 1.4% to £626m from £625m, reflecting weaker like-for-like sales of -0.6%, the cost of investing in new customer offers and higher inflation.
The dip in underlying profits and the impact from issuing additional shares after its merger with Home Retail Group, reduced the group’s underlying basic earnings per share by 9.9% to 21.8p.
Shares in the UK’s second largest retailer were down 4% to 266.3p, on the back of its final results.
