Opening Quote: Sainsbury profits fall despite Argos uplift

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Ever since J Sainsbury acquired Argos, and put branches of the catalogue retailer into its supermarkets, it has extolled the virtues of the varied cross selling opportunities. Buying some chicken? Then pick up a barbecue on which to undercook it on a freezing Bank Holiday weekend. Grabbing some picnic items? Then grab a 4k flat screen TV on which to watch Carry On Camping while waiting for the rain to stop. Like our multibuy discount on pies? Check out the special offer on exercise bikes. You get the idea.

However, its full year results appear to show that customers prefer more of one than the other. Sainsbury’s like-for-like sales fell 0.6 per cent in the year to March 11. But like-for-like sales at Argos outlets in Sainsbury’s supermarkets open for more than one year were up between 20 and 30 per cent.

As a result, group sales including VAT and new store openings rose 12.7 per cent – mainly as a result of the Argos contribution. So, despite inflationary pressures, Sainsbury is planning to open lots more. Having delivered its £160m earnings synergy target six months ahead of schedule, it is accelerating the roll out of 250 Argos Digital stores in Sainsbury’s supermarkets.

Overall underlying profit before tax came in at £581m, down 1 per cent on last year and slightly better than forecast – reflecting “investment in the customer offer” and cost inflation, offset by cost savings of £130m and a £77m contribution from Argos. But pre-tax profit fell 8 per cent to £503m.

Chief executive Mike Coupe said:

Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price. We are also investing in growth areas of the business to meet the changing ways that customers shop… We are pleased with the progress made since we acquired Argos. We have opened 59 Argos Digital stores in Sainsbury’s supermarkets and they are performing well.

But Halford’s chief executive Jill McDonald will soon be getting on her bike and cycling down to Marks and Spencer – to take up a new job as its managing director of clothing, home and beauty. She will remain in the saddle at until the end of her notice period in October, though, and the board has begun the process to appoint her successor.

She said:

Halfords is a great company with a fantastic team of people throughout the business, making my decision to leave all the more difficult. Our customer-centric, service-led strategy has real traction and I look forward to working with the team over the next six months continuing to deliver further progress across the Group.

Expect to see lots of unflattering lycra amid the beige cardies at M&S later in the year.

ITV chief executive Adam Crozier is also moving on, after seven years trying to rebalance the broadcaster’s revenues away from advertising and towards content. He now plans to “build a portfolio of roles across the PLC and private sectors”. Lots of non-executive directorships, then. He should prove good value, though. Having been ranked the 17th best value for money CEO in the FTSE 100 last year, he became even cheaper after taking a 12 per cent pay cut when ITV missed profit targets.

Chairman Sir Peter Bazalgette said ITV and the board were “deeply indebted to him for his strong leadership”.

And, finally, the high street’s favourite pub bore is at it again. JD Wetherspoon chairman Tim Martin has chosen to gloss over the 4 per cent improvement in like-for-like sales at his bargain boozers, and instead moan about “significantly higher costs” because of business rates, utility taxes, excise duty and labour – as well as the foolhardiness of not threatening the EU with the hardest of Brexits.

Turning on the CBI, he criticised its view that “leaving the negotiating table without a deal shouldn’t be Plan B, but Plan Z”. This is “the same as a housebuyer saying to a seller, ‘I must have your house at any cost’,” claimed Mr Martin.

CBI members might want to think on that when they are next in for a pint of Carling and a curry.

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