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Last year was a difficult one for the UK supermarket sector and Sainsbury’s was no exception. The company announced its first quarterly drop in like-for-like sales in nine years then it followed that up with a first-half loss of £290 million.
Sainsbury’s customers are a good example of the squeezed middle that defected to deep discount retailers like Lidl and Aldi and haven’t looked back since. The high and low ends of the supermarket spectrum are gaining market share while Sainsbury’s is stuck in the middle of the price war.
The firm has penciled in £150 million worth of discounts across its products and in doing so it kept its interim dividend unchanged. In terms of cash payouts the dividend remains the same, and the company pledged to keep the dividend cover constant. If profits decline we can expect the dividend to be lowered in line with it.