Sainsbury’s defers £160m dividend as profits remain flat despite pre-lockdown sales rush
Sainsbury’s has deferred a £160million dividend and cancelled bonuses despite its supermarkets being ‘busier than Christmas’ in the week before lockdown.
Bosses said the business will not profit from the crisis as the hike in demand is offset by an extra £500million in staffing and store costs.
This will only just be covered by £450million it is saving thanks to the Government’s business rates holiday, the supermarket claimed, once weaker fuel, general merchandise and clothes sales are taken into account.
Sainsbury’s bosses said the business will not profit from the crisis as the hike in demand is offset by an extra £500m in staffing and store costs
Food sales in the peak week to March 21 jumped by a staggering 48 per cent. But the supermarket’s general merchandise and clothing business, part of which operates through Argos, has suffered.
Clothing has been down between 40 per cent and 70 per cent in the last four weeks, and Sainsbury’s is selling 75 per cent less fuel.
The turbulence has led bosses to postpone payment of a dividend, meaning shareholders will not receive a payout in July worth £174million or around 7p per share.
Chief executive Mike Coupe said: ‘Ultimately given the level of uncertainty we thought it prudent to defer any decision on paying the dividend until the autumn.’
Coupe expected demand to be between 7 per cent and 9 per cent higher under lockdown, which he believes will ease at the end of June.
Despite this he does not expect the food business to return to normal until the end of September due to ongoing social distancing measures.
In the year to the end of March, Sainsbury’s suffered a 0.6 per cent fall in sales to £28.9billion, and a 15.8 per cent rise in pre-tax profit to £255million.