UK supermarket Sainsbury’s says to slash costs

London: British supermarket Sainsbury’s, which failed to merge with Walmart-owned Asda earlier this year, unveiled a major cost-cutting plan.

Sainsbury’s will seek to axe £500 million ($623 million, 566 million euros) in costs over the next five years, it announced in a trading update, which also revealed sliding quarterly sales amid fierce competition.

The company will shutter up to 70 standalone branches of catalogue division Argos — but will also open another 80 Argos units inside its existing Sainsbury’s stores.

Sainsbury’s will also close 15 large supermarkets and 40 smaller convenience stores, but at the same time will also open ten big stores and some 110 convenience outlets.

The London-listed retail giant did not specify how many jobs are due to be shed, but the overhaul is forecast to cost between £230 million and £270 million.

And it warned that this year’s first-half profits would take a £50-million hit from the restructuring, unseasonal weather and high marketing costs.

Sainsbury’s also revealed falling sales in the second quarter of the group’s financial year, or 12 weeks to September 21, compared with a year earlier. — AFP