Sainsbury's profit down 39% as costs offset sales rise

British supermarket group Sainsbury's on Wednesday reported a 39% fall in full year underlying profit as strong food sales during the COVID-19 pandemic were outweighed by extra costs and a decision to forgo business rates relief. Sainsbury's, the UK's second largest grocer after Tesco , said it made an underlying pretax profit of 356 million pounds ($494 million) in the year to March 6 - in line with guidance of "at least" 330 million pounds but down from 586 million pounds made in 2019-20.

British supermarket group Sainsbury's on Wednesday reported a 39% fall in full year underlying profit as strong food sales during the COVID-19 pandemic were outweighed by extra costs and a decision to forgo business rates relief.

Sainsbury's, the UK's second largest grocer after Tesco , said it made an underlying pretax profit of 356 million pounds ($494 million) in the year to March 6 - in line with guidance of "at least" 330 million pounds but down from 586 million pounds made in 2019-20. Grocery sales rose 7.8% and general merchandise sales increased 8.3% but the company said it incurred an extra 485 million pounds in costs due to the crisis.

The group declined business rates relief offered by the government worth about 410 million pounds. Sainsbury's said it still expected underlying pretax profit in the 2021-22 year to rise and is comfortable with analysts' consensus forecasts of around 620 million pounds.

($1 = 0.7204 pounds)