SUPPLY chain issues failed to dent Sainsbury's profits as it hailed a significant half-year hike.
The supermarket giant reported a 23 per cent lift in underlying pre-tax profits to £371 million for the 28 weeks to September 18, despite falling recent sales after supply chain challenges affected its Argos business.
Sainsbury’s warned of mounting supply chain issues and labour shortages within the industry but said it is "in a good position" to cope with the pressures.
On a statutory basis, it swung to a £541m pre-tax profit from losses of £137m a year earlier.
Like-for-like group sales, excluding fuel, rose 0.3% overall in the first half, but slipped 1.4% in the second quarter after general merchandise sales tumbled.
Total Argos sales slumped 12% year-on-year in the second quarter, with the group blaming "supply challenges, unseasonal weather and lower demand for home office equipment and technology" in the second quarter.
The retailer sent its own drivers to some suppliers, such as milk producers, to pick up products amid HGV driver shortages in the UK.
It kept its full-year profit outlook of "at least" £660m, up from £356m made in 2020-21.
Many retailers have faced supply chain challenges amid fallout from Brexit and the pandemic.
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Simon Roberts, chief executive of Sainsbury's, said that consumer electricals is one specific area where availability is below expectations, due to a global chip shortage.
"Our industry faces labour and supply chain challenges," he said. "However our scale, advanced cost saving programme, logistics operations and strong supplier relationships put us in a good position as we head into Christmas."
Susannah Streeter, of Hargreaves Lansdown, said that the "cheerful message" was tempered with warnings that there would be less electrical stock.
She said the rise in profit “wasn’t enough to stop a substantial share slide of more than 3%, with clearly a challenging few months ahead”.
John Moore, of Brewin Dolphin, said: “These results will do little to dissuade potential buyers of the business – particularly as debt reduction targets are on track – and rumours of interest in the company are likely to persist following Morrisons’ takeover.
“Although up in the year to date, the shares still trade some way off previous peaks.”
Shares in Sainsbury’s were down 2.46%, or 7.1p, at 281.8p at close.
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