Sainsbury’s chief Mike Coupe warns election could cause New Year ‘hangover’

Mike Coupe believes the December 12 election could disrupt festive trading
Nigel Howard
Alex Lawson @MrAlexLawson7 November 2019

Sainsbury’s chief Mike Coupe today warned that a potential election “hangover” could hit consumer spending in the New Year.

The grocer said the December 12 election could disrupt trading during one of retail’s busiest periods and keep wallets shut in early 2020.

Speaking as the grocer posted a dive in profits, Coupe said: “Our experience is that people will celebrate Christmas, they always do. We would expect that we would do well over Christmas but depending on the outcome of the election and how quickly we get the whole Brexit situation resolved there may well be a hangover into the new calendar year.”

Coupe predicted a “fairly dull day for retail sales” on polling day and said its timing during the key festive trading period was “unhelpful”.

He added: “Customers will almost certainly spread their Christmas spend around the day of the election, so I’m not sure much will go missing, they’ll choose to shop either later or earlier.”

The retail chief said he had not considered an idea mooted in the media that stores should be used as polling stations to boost footfall on the High Street and reduce disruption to schools.

Coupe called on the new government to resolve Brexit quickly, tackle business rates and liberalise planning policies. He believes looser laws could see High Streets revived with more leisure, housing and offices and fewer shops.

Sainsbury’s first-half profits were almost wiped out by the cost of shutting stores, down to £9 million from £107 million last year. In September, the retailer outlined plans to shut 70 Argos stores, replacing them with shops within its supermarkets, and close 15 supermarkets and 40 convenience stores.

Stripping that out, profits fell 15% in to £238 million while same-store sales fell 1%. But analysts took heart from the fact grocery sales rose 0.6% in the second quarter, up from a fall of 0.5% the quarter before.

General merchandise sales, including Argos, fell 2.5%. The retailer blamed a “subdued” non-food market, marketing costs and “unseasonal weather” compared with last year’s sizzling summer.

Richard Lim of Retail Economics said: “The sharp fall in profits may well reflect the phasing of cost savings, but blaming the weather and higher marketing expenses suggests there is significant pressure on profit margins bubbling under the surface. There’s no getting away from the fact that sales fell across all parts of the business, reflecting tough market conditions.”

Sainsbury’s is still reeling from the collapse of its £7 billion merger with Asda earlier this year.

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