// Sainsbury’s underlying pre-tax profits drop 2% to £586m

// Total grocery sales jumped 12% in the seven weeks to April 25

Sainsbury’s has reported a decline in underlying full-year profits as it warns of a coronavirus hit of more than £500 million to the current year’s profits.

The Big 4 grocer saw a two per cent fall in underlying pre-tax profits to £586 million for the year to March 7.

On a statutory basis, pre-tax profits rose to £255 million from £202 million the previous year.

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Total grocery sales jumped 12 per cent in the seven weeks to April 25, compared with a two per cent rise in the final quarter of its previous financial year.

The grocer warned of a £500 million hit due to the pandemic as it said social distancing measures together with falls in clothing and fuel sales would offset surging grocery trade.

Sainsbury’s also said the impact of Covid-19 is expected to leave underlying pre-tax profits broadly flat for the year to March 2021, despite £450 million in business rates relief.

It has scrapped its final shareholder dividend and said decisions on further payouts would be deferred until later in the financial year – a decision which comes after rival Tesco faced criticism for paying out £635 million.

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