Sainsbury’s posted an 18% drop in first half profits in the first half of the year due to what it called a “particularly challenging” market.
The company said that pre-tax profit excluding exceptional items in the six months to September 26 dropped 18 percent from £375m to £308m.
However, the figure still managed to beat analysts’ expectations of about £293m.
Including exceptional items pre-tax profit increased from a £290m loss last year to profit of £339m.
The loss last year was due to £665m of charges related to the write-down of the value of its stores.
Retail sales, excluding fuel, fell 0.1%, while like-for-like sales dropped 1.6%.
Sainsbury’s has faced fierce competition from discounters Lidl and Aldi. The retailer’s market share has fallen to 16.5% as consumers in the UK opt for cheaper shopping options.
On a positive note, the company posted nearly 11% growth in sales at its convenience stores in addition to 7% growth in online grocery sales.
Mike Coupe, Sainsbury’s chief executive, said: “We are making good progress against the strategy we outlined last November. We are delivering volume and transaction growth as customers value our quality improvements and our clearer, simpler message of lower regular prices.”
Sainsbury’s said that full-year underlying pre-tax profit would be “moderately ahead of published consensus” of £548m.
Richard Hunter, the head of equities at Hargreaves Lansdown Stockbrokers, was quoted by The Guardian as saying: “There is little doubt that Sainsbury is improving on a number of fronts, although overall the company remains a work in progress.”