Tough year for Sainsbury's continues as profits fall 10 per cent

The group said it would continue to cut prices for shoppers, but cautioned that the impact of the plunging pound on prices was “uncertain” as it braces for an increase in costs over its second half.

Sainsbury’s reported underlying pre-tax profits of £277 million for the six months to September 24, down from £308 million a year earlier.

Bottom line pre-tax profits rose 9.7% to £372 million.

It said second-half profits excluding Argos and Habitat owner Home Retail Group - snapped up earlier this year for £1.4 billion - were expected to be lower due to “continued price investment and a step-up in cost inflation in the second half”.

Full-year results overall are set to be in line with market expectations thanks to a boost of between £55 million and £75 million from Home Retail in the second half.

Sainsbury’s chief executive Mike Coupe said the group had made “good progress” on its turnaround strategy against “challenging” trading conditions.

But the group added: “The market remains competitive and pricing pressures continue to impact margins.

“The full impact of the devaluation of sterling on retail prices is as yet uncertain.”