UPDATE 1-Sainsbury's profit falls 15% after failure of Asda deal

British supermarket group Sainsbury's reported a 15% fall in first-half profit, blaming the combined impact of the phasing of cost savings, higher marketing costs and tough weather comparatives with last year which impacted sales.

The 150-year old group did, however, forecast on Thursday that second-half profits would benefit from the annualization of last year's staff wage increase and normalization of marketing costs and weather comparatives - implying it was on track to make analysts' profit consensus for the full 2019-20 year. The first half profit fall comes as Sainsbury's tries to rebuild confidence in its strategy following a botched attempt to take over rival Asda. Britain's competition regulator blocked the agreed 7.3 billion pound ($9.4 billion) deal in April and Sainsbury's shares have fallen 34% over the last year.

In September, Chief Executive Mike Coupe put cost-cutting and paying off debt at the heart of a new plan designed to show Sainsbury's can prosper on its own. The group made an underlying pretax profit of 238 million pounds in the 28 weeks to Sept. 21. That compares with analysts' average forecast of 232 million pounds but is down from 279 million pounds made in the same period last year. Group sales fell 0.2% to 16.86 billion pounds, with like-for-like sales, excluding fuel, down 1.0%.

Prior to the update analysts were on average forecasting a 2019-20 pretax profit of 584 million pounds, down from 601 million pounds in 2018-19. Sainsbury's reported a statutory pretax profit of just 9 million pounds for the first half. That reflected 229 million pounds of one-off costs, the bulk of which follows a review of its store estate.

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