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LONDON - U.K. grocer J Sainsbury yesterday reported its first-ever pretax loss after investing heavily in restructuring in a bid to halt a slide in its finances, according to published reports.
The company posted a pretax loss of 39 million pounds (U.S. $72 million) for the 28 weeks to October, compared with a gain of 323 million pounds in the year-ago period.
Exceptional costs relating to Sainsbury's business review, the sale of Shaw's Supermarkets in the United States, and the return of capital to shareholders had a major impact on the results for the period.
Before exceptional items and certain financial items, half-year pretax profits plummeted to 131 million pounds from 366 million last year, in line with market expectations, which were drastically reduced after Sainsbury issued three profit warnings this year. Net profit plunged to 24 million pounds from 206 million.
Sainsbury is fighting to overcome a decade-long decrease in market share that has seen the onetime market leader eclipsed by Tesco and Wal-Mart-owned Asda.
In October Sainsbury said it would take 550 million pounds of one-off charges this fiscal year, following an ill-fated 3 billion-pound investment in supply chain and information technology improvements.
After an extensive business review spearheaded by chief executive Justin King, the company is investing up to 400 million pounds over the next three years in bettering its "customer offer," a strategy that includes lowering prices.
"We are clear on the actions we need to take to make Sainsbury's great again," King said in a statement. "We are now beginning the implementation of the plans arising from the business review to rebuild a sustainable sales-led recovery."
The retailer repeated its forecast that underlying profit before tax for the second half is not expected to be much different from the figure for the first half, when total sales at Sainsbury supermarkets went up 3.5 percent to 8.35 billion pounds.