Sainsbury's chief executive Simon Roberts has called on the Chancellor to avoid further significant increases to business taxes and labour costs at the autumn Budget next Wednesday, warning that "many households are finding things tough at the moment" amid pressure on consumer budgets.
Speaking after positive talks with ministers at No 11 Downing Street last week, Mr Roberts said he believes the current Government is "listening" to business. He stressed that it is "really important we don't see a repeat" of previous Labour budgets.
Government talks and reform calls
"I think this Government is listening to business," Mr Roberts said. "We've had the opportunity to meet with figures from Government and stress that it is really important we don't see a repeat from previous budgets."
The supermarket executive urged the Government to bring about positive reform to the business rate tax system, help encourage businesses to hire, and increase capacity rules linked to farming investments.
Stronger grocery sales and profit outlook
The comments came as Sainsbury's improved its profit outlook on Thursday, revealing stronger grocery sales over the past half-year. The retailer said it saw shoppers buying greater volumes of products as price inflation slowed over the period.
Sainsbury's told shareholders that total revenues increased by 4.1% to £16.2 billion for the 28 weeks to September 12, compared with a year earlier. Sales from continuing operations, excluding fuel, were up 2.6%, on the back of a 2.9% rise in grocery sales to £13.2 billion for the period.
General merchandise sales, which includes its Tu brand, slipped 3.4% due to reduced sales space in stores and a "subdued clothing market". However, fuel sales shot 17.8% higher over the half-year due to the sharp jump in prices since the Iran war pushed up global oil prices.
Argos sale and merger speculation
The company reported underlying operating profit of £525 million, up 3.6%, for the half-year. It said it is now on track to deliver an underlying operating profit of between £1.025 billion and £1.065 billion for the year, having previously guided towards a range of between £975 million and £1.075 billion. This would now be the equivalent to between £965 million and £1.065 billion due to its proposed sale of Argos.
In July, Sainsbury's agreed to sell Argos for at least £120 million to Swift Partners – a new company set up by retail experts including former Co-operative Group boss Richard Pennycook – around 10 years after buying the brand for £1.4 billion.
Mr Roberts said: "As we progress the sale of Argos and further sharpen our focus on food, we are building a simpler, more focused Sainsbury's. With great value, outstanding quality and exciting new food across our ranges, we're looking forward to helping customers enjoy a really special Christmas."
The results also come on the back of reports that Sainsbury's held talks with private equity-backed rival Morrisons – currently the sixth-largest grocer – earlier this year in a fresh attempt at consolidation. The Financial Times reported the groups are no longer in talks but ignited fresh speculation that Sainsbury's could see another major merger deal, after efforts to merge with Asda collapsed in 2019. On Thursday, Mr Roberts said he "would comment on speculation".
