British supermarket Sainsbury's has posted its first annual underlying profit fall since 2005. As Hayley Platt reports it's been hurt by an industry price war that shows no sign of abating.
It's unfamiliar territory for Sainsbury's. The British supermarket has posted its first full-year profit loss in a decade. It was hurt by property writedowns, deflation and an industry price war which shows no sign of ending. Sainsbury's couldn't rule out further price cuts beyond the 150 million pounds already committed to. Shares, already down 14 percent over the last year, fell a further 2.8 percent. And the full-year dividend is being cut by almost a quarter. Justin Urquhart-Stewart is from Seven Investment SOUNDBITE: Justin Urquhart-Stewart, Seven Investment Management, saying (English): "What all these supermarkets need to do, is go back to basics. What are they there to do, focus on that, at the right price for the right customer. If they get that wrong, as Tesco did then they'll be in serious trouble." Food deflation is a problem for all UK supermarkets. But Sainsbury's, Tesco, Asda and Morrisons are also having to cut margins to compete with discounters like Aldi and Lydl. SOUNDBITE: Justin Urquhart-Stewart, Seven Investment Management, saying (English): "The British consumer over the past few years has realised that the difference between what they can buy at a discounter and what they can buy at a full service supermarket wasn't just a matter of a few pence but a very significant difference indeed and most people just hadn't realised it." The changing retail landscape to one where more consumers shop little and often isn't the only problem facing Sainsbury's CEO. Mike Coupe is trying to overturn a conviction he received last year in Egypt. It relates to charges of embezzlement following the collapse of a business there which Sainsbury's invested in over a decade ago. Coupe was sentenced, in his absence, to two years in jail.