Thu, 17 Apr 2025

Thu, 17 Apr 2025 Supermarket price war looms as Sainsbury's joins fight

The supermarket giant forecasts pressure on profits as competition for customers intensifies.
Sainsbury's expects its shop profits to remain stable or even decrease in the coming year due to the supermarket sector's potential price war. The company forecasts an income of £1bn, which is slightly lower than expected. This decision comes as Sainsbury's invests in reducing grocery prices, a move that could lead to a price war among supermarkets. Tesco had previously warned that it might suffer significant losses if forced to cut prices following Asda's announcement to reduce costs and boost sales under the leadership of industry veteran Allan Leighton. The threat of an intense competition arose after Mr. Leighton stated that Asda would take a hit to its profits to lower prices and regain market share. Sainsbury's is confident in its ability to maintain its competitive position, with CEO Simon Roberts stating: "We're in the strongest position we've ever been on price competition and intend to stay there." The company predicts an underlying retail profit decline of around £36m, which could provide some room for maneuver if a price war escalates. Sainsbury's reported strong sales growth, with full-year sales increasing by 3.1% to £31.5bn, while pre-tax profit rose from £277m to £384m. The company also owns Argos and Habitat, but it declined to comment on the potential impact of US President Donald Trump's tariffs on its business. The supermarket reported a significant drop in fuel sales due to reduced demand and lower petrol prices, while its revenue grew strongly over the 12 months to March. The falling cost of motor fuel contributed to the easing of inflation from 2.8% in February to 2.6% in the year to March.
  >>