Failed Asda merger bid cost Sainsbury’s £46m as retailer announces huge hit on annual profits

Sainsbury's Asda

The failed bid to merge with rival Asda cost Sainsbury’s £46m, the supermarket giant has said.

In April, a proposed merger between Sainsbury’s and Asda was blocked by the UK’s competition watchdog over fears it would raise prices for consumers.

Sainsbury’s said that like-for-like sales growth continued to slow in the fourth quarter, especially over the Christmas period.

It added it would accelerate investment in its store estate and technology.

Fourth-quarter sales fell 0.9%, having fallen 1.1% over Christmas.

In the year ending 9 March, profit before tax fell to £239m, from £409m the previous year. Costs for the year included the failed Asda bid, restructuring costs of £81m and defined benefit pension expenses of £118m.

Chief executive Mike Coupe told the BBC’s Today programme: “Well, we draw a line under the past… The authorities blocked the deal, but we think our business is adapting to the changing world of retail, and we will will carry on investing in our business.”

Mr Coupe said Sainsbury’s would invest in 400 supermarkets over the next year and would continue to invest in online sales.

He added that he would be “sticking to the company” when questioned about whether he had been asked to step down after the failed merger.

Speaking about the announcement Will Broome, CEO & Founder of Ubamarket said: “Given the current state of bricks and mortar stores, blocking the Sainsbury’s and Asda merger can only be a positive move for the market. But, now all eyes are on Sainsbury’s to see what moves will be made in a bid to boost their sales.

Sainbury’s decision to implement retail tech in Holborn Circus supports how technological innovation enables supermarket retailers to enrich the shopping experience for consumers whilst broadening their in-store offering. It is beneficial for supermarkets to consider implementing retail tech into their offering in bricks and mortar stores. This levels the playing field between in store and online sectors whilst driving prices down for consumers in the process. Retailers have a duty to find a balance in their responsibilities to their employees and consumers in ensuring that food quality, choice and a competitive market is available.

However, till-free shopping is not enough. Consumers may not be aware that this technology has the capacity to save them money as well as time. Personalised in-store offers and real-time loyalty updates are well within the capacity for this technology and it is essential that retailers implement these additions. If retailers are going to digitalise shopping then they should allow shoppers to add their shopping lists to the apps, be guided around the store and get more information about the products that they’re buying. While a great step forward, just being able to scan and go is insufficient – it is crucial to include the full capabilities of this kind of technology.”