Sainsbury's Faces £140 Million Cost Spike Due to Budget Changes
- Sainsbury's anticipates an increase in costs amounting to £140 million due to tax alterations from last week's Budget.
- The company has reported a revenue growth of 2.3% to £17.2 billion for the first half of the fiscal year, despite the negative impact on profits.
- Simon Roberts urged the government to expedite business rate reforms to alleviate pressures on the retail industry.
Sainsbury's, the UK’s second largest supermarket, has announced that recent tax changes following the Chancellor's Budget will impose an additional cost of £140 million on the retailer. This increase stems mainly from rising company national insurance contributions and alterations in the eligibility threshold for business rates. Furthermore, the company is also bracing for higher expenses related to the national living wage. Despite these pressures, Sainsbury's experienced a strong trading performance in the lead-up to the festive season, reporting a revenue increase of 2.3% to £17.2 billion for the first half of the fiscal year. Sales surged mainly due to a boost from their premium product range and increased market share in the grocery sector. However, the company's pre-tax profits have plummeted by 51% to £76 million due to a restructuring of its financial services division. The chief executive, Simon Roberts, expressed concern over the cumulative burden of these costs affecting consumer prices and urged the government for quicker reforms to business rates.