Supermarket Sainsbury’s has notched up a rise in annual underlying profits but saw hefty charges, including a £46 million hit from its failed bid to merge with Asda, knock its bottom line.
The chain reported a 7.8% rise in underlying pre-tax profits to £635 million for the year to March 9.
But statutory after-tax profits plunged to £219 million from £309 million the previous year, weighed down by £396 million of charges, including £46 million in costs for the ill-fated Asda deal.
Sainsbury’s also revealed a 0.9% fall in like-for-like sales in the final three months of its financial year after grocery and clothing trading suffered.
The figures come after Britain’s competition watchdog last week blocked Sainsbury’s audacious £12 billion bid to merge with rival Asda.
The Competition and Markets Authority (CMA) vetoed the deal, saying it would lead to increased prices in stores, online and at petrol stations across the UK, with shoppers left “worse off” and quality affected.
Sainsbury’s Group chief executive Mike Coupe pledged to ramp up investment in the group amid “competitive” conditions.
“We will increase and accelerate investment in the core business, investing to improve over 400 supermarkets this year,” he said.
“I am confident in our strategy and also clear on what we need to do to continue to evolve the business in a highly competitive market where shopping habits continue to change.”
Sainsbury’s also warned over a “very promotional” market and said the “consumer outlook continues to be uncertain”.
Its full-year like-for-like sales performance was left 0.2% lower after a difficult second half for the group.
Total grocery sales fell 0.6% in the fourth quarter, while clothing dropped 1.6%.
Its results showed that, as well as the costs of the Asda merger, bottom-line profits were also sent lower by a raft of other charges, including £81 million in retail restructuring costs after changes to its workforce.
But as well as vowing to boost investment in its stores and technology, Sainsbury’s also promised to slash its net debt by at least £600 million over the next three years.
Last week’s ruling from the CMA put paid to Sainsbury’s hopes of leapfrogging market leader Tesco to take pole position.
The decision came at a testing time for Sainsbury’s, which, like the rest of the sector, is battling against the rising might of German discounters Aldi and Lidl.