Big blow as Sainsbury’s suffers £261m loss – roll out of ‘Neighbourhood Hub’ stores continues

Big blow as Sainsbury’s suffers £261m loss – roll out of ‘Neighbourhood Hub’ stores continues

News that Sainsbury’s made a pre-tax loss of £261m has come as something of a surprise – with the losses blamed on both the high costs of Covid and the re-structuring of its Argos stores, and despite the surge in pandemic-led grocery sales.

The news comes as the company commits to rull out more of its ‘Neighhbourhood Hub’ stores.

As the company turns to focus on its ‘Food First’ strategy, Sainsbury’s UK chief Simon Roberts says the business is in good shape – despite the headline-grabbing loss.

Despite weaker sales performance in some of its smaller stores recently, Sainsbury’s revealed that it is planning to open between 25-30 convenience outlets per year over the next three years and roll out its new ‘Neighbourhood Hub’ format.

Convenience division

The group opened 15 c-stores last year and closed 9, taking the total to 813. However, the convenience division suffered a 9.4% fall in sales after many of its urban sites were impacted by reduced footfall. This was partly offset by better performance of stores in neighbourhood locations that benefited from customers shopping locally.

Neighbourhood Hub format

Sainsbury’s began rolling out its new ‘Neighbourhood Hub’ format last year following limited trials. The new outlets are a food-led extension of its existing convenience offer but in a much larger format (around twice the size of a standard Sainsbury’s Local). They offer a broader range of locally tailored products and services across food, beauty, clothing, seasonal and general merchandise.

There are five of these stores now trading with Sainsbury’s planning another 18 over the next three years. The company said they have proved “very popular” with customers and are delivering high returns.

There were £600m of exceptional costs due to its transformation of its Argos stores – as Argos integrates more into the grocery stores.

Sainsbury’s also spent £485m on looking after staff and cusomers during the pandemic, mainly via safety measures in-store.

Despite the turbulent times and the apparent hefty loss in pre-tax profits, it seems the long term strategy is rolling along nicely – the future is looking bright, if not orange. There is no indication just yet whether or not this new ‘Neighbourhood Hub’ format is set for Northern Ireland.