Sainsbury's Financial

Sainsbury’s invests £150m to compete with Aldi and Lidl as profits fall 6.3%


By Jennifer Faull, Deputy Editor

November 12, 2014 | 2 min read

Sainsbury’s has reported its worst performance in over a decade as profit before tax fell 6.3 per cent in the six months to the end of September to £375m.

Meanwhile, like-for-like sales dropped 2.1 per cent with chief executive Mike Coupe stating they are likely to continue falling over "the next few years".

Coupe said the current market is a “perfect storm” of challenges which he hasn’t encountered in his 30 years in the grocery sector.

In response, Sainsbury’s has ploughed £150m into a price cut strategy to compete with the likes of Aldi and Lidl.

Complementing this “investment”, Coupe revealed up to 15 discount Netto stores will be opened by the end of 2015 on the back of the trail that kicked off last week.

Sainsbury’s said this will “give access to the growing discount grocery channel".

He added that currently three quarters of its stores “are performing well” and the remaining quarter have “too much space” which needs to be used better. This will see the introduction of its mobile business, clothing range and potentially more Netto stores.

It will also pilot new store formats in the coming year to “address the balance between food and non-food”.

The supermarket's online business grew by around nine per cent with online deliveries now exceeding 200,000 a week.

Coupe will outline the strategy further in a call with invetsors later today (12 November).

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