The UK’s third biggest supermarket group said a price war, property writedowns and record low prices has hit trading.
Chief executive Mike Coupe said: “It’s great news for customers. Groceries are cheaper than last year. We anticipate that will continue this calendar year and into next. We’re not seeing any respite from that.”
Despite the problems and what chairman David Tyler called “the most challenging year in the grocery sector any of us can remember”, Mr Coupe said: “We have a plan. We are executing it and if anything we are more confident than we were six months ago.”
Mr Coupe said he expects deflation to continue in the grocery market for the rest of 2015 and possibly into 2016,
Sainsbury’s has set aside £150m for price cuts this year and is not ruling out further cuts.
“The big unknown is the extent to which our competitors may or may not choose to invest in price,” said Mr Coupe.
“We will match them toe-to-toe.”
Sainsbury’s made an underlying pre-tax profit of £681m in the year to March 14, ahead of analysts’ average forecast of £659m, but down 14.7 per cent from the £798m made the year before.
After £753m of exceptional charges announced alongside half-year results in November, mainly due to a writedown of the value of its property to reflect the deterioration in market conditions, Sainsbury’s posted a statutory pre-tax loss of £72m.
Sainsbury’s sales fell 0.9 per cent to £26.1bn, while like-for-like sales fell 1.9 per cent.