New Argos owner Sainsbury’s has reported a double-digit fall in profits as sales followed suit.
According to its half year interim results for the 28 weeks to 24 September 2016, Sainsbury’s saw like-for-like sales fall by 1%, although total underlying group sales grew 2.1% to £13,923m.
The supermarket giant posted a 10.1% drop in underlying pre-tax profit to £277m, compared to its £208m recorded over the same period in 2015, whilst the group said that net debt has been reduced by £485m from March 2016 to £1.3bn.
Despite the decline, Sainsbury’s maintained its accelerated Argos strategy, with plans to open 30 Argos digital stores and 200 digital collection points in supermarkets by Christmas, as well as confirming that 250 Argos digital stores in supermarkets will open over the next three years.
During its Q2 announcement back in September, Sainsbury’s reported a 2.8% growth in half year sales at Argos, with like-for-likes up by 1.2%.
Earlier this year, Sainsbury’s acquired Argos-owned Home Retail Group in deal worth £1.4bn to expand its non-food offering within its stores, combining both Argos and Habitat as one ‘multi-channel, multi-product retailer’.
Sainsbury’s said that Argos is expected to deliver an underlying profit contribution to the group of £55m-£75m in the second half, whilst full year 2016/17 net debt is expected to be around £1.5bn, mainly as a result of the HRG acquisition.
Mike Coupe, group chief executive of J Sainsbury plc, said: “The acquisition of HRG accelerates our strategy to give customers choice, convenience, speed and flexibility in when, where and how they shop. The combination of our products, services, customer data and fast delivery networks gives us a strong platform for growth and enables us to deliver clear synergies.”