Sainsbury"s statutory interim profits fall 92%"

In the 28 weeks to September 21, the United Kingdom grocer made a pretax profit of 9 million pounds ($11.6 million), compared with GBP107 million in the first half of fiscal 2019.

The half-year results show total sales dropped by 0.2 per cent to £16,856 billion, with retail sales, excluding fuel, down 0.6 per cent and like-for-like sales down one per cent.

Sainsbury's reported a statutory pretax profit of just £9 million for the first half. "We would expect that we'll do well over Christmas", Sainsbury's CEO Mike Coupe told reporters.

The supermarket blamed the combined impact of the phasing of cost savings, higher marketing costs and tough weather comparatives with previous year which impacted on sales.

Mike Coupe, chief executive of the leading United Kingdom supermarket group (SBRY.L), also warned Brexit uncertainty "weighs heavily" on its customers and said election day would hit supermarket sales.

Sainsbury's last month revealed a strategic plan to close 125 stores and replace these with 110 convenience stores and inserting 80 Argos outlets inside the bigger stores, which should cost up to £270mln but lead to savings of £500mln over the next five years.

The £200m cost of closing 15 supermarkets and dozens of Argos stores has all but wiped out profits at Sainsbury's as the supermarket faces rising competition from discount rivals.

He added: "I would suggest that the whole Brexit scenario hangs over customers and creates uncertainty, so the quicker we can resolve that situation, the [sooner] economic factors should rebalance themselves". All Argos shops were expected to be converted to a digital format by the end of this year.

"We have set out our plan to create one multi-brand, multichannel business".

Richard Hunter, head of markets at Interactive Investor, said the "largely uninspiring" update would likely raise further questions on Sainsbury's strategy following the failure of the Asda merger.

He said the retailer "now has to decide how to differentiate itself in a notoriously competitive sector".

But its share price ticked up 1.6% on the announcement after the company said it was still on track to meet analysts' expectations for the full year.

Net debt reduced by £568m to £6.7bn, reflecting strong cash generation.

Hargreaves Lansdown equity analyst Sophie Lund-Yates said Sainsbury's faced a battle to compete in a fast moving sector. It begs the question: what can Sainsbury's do to differentiate itself?

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