Sainsbury’s slumps to £261m loss as Covid costs rise to almost half a billion pounds

‘This year’s financial results have been heavily influenced by the pandemic’, firm’s chief executive says

(PA)

Sainsbury's has tumbled to a £261m loss despite a jump in sales during the pandemic, as Covid-related costs approached half a billion pounds.

The UK's second-largest supermarket chain reported sales up 7.8 per cent in the year to 6 March as online orders more than doubled.

It saw an 8.3 per cent rise from non-food sales as competitors selling goods deemed to be non-essential were forced to close during lockdowns. Argos sales were up 10.9 per cent, including a 68 per cent rise in digital sales.

With fewer people taking car journeys, fuel sales fell 45 per cent, offsetting some of the boom in grocery sales.

Sainsbury's has incurred £485m in costs relating to the pandemic including updating its stores to make them Covid-secure.

It also spent money on restructuring its business, a process that saw 500 head office jobs axed with a further 650 staff likely to go if they cannot be relocated.

Despite the challenges, Sainsbury's will pay a dividend to shareholders of 7.4p a share, up from 7.3p a share a year ago.

Chief executive Simon Roberts said: "This year's financial results have been heavily influenced by the pandemic.

"Food and Argos sales are significantly higher, but the cost of keeping colleagues and customers safe during the pandemic has been high.

"Our full-year direct Covid-19 costs were £485m, leading to a 39 per cent decrease in full-year underlying profit.

"We are pleased to propose a full-year dividend which is in line with last year, protecting shareholder income from the full impact of Covid-19 on profits."