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The boss of Sainsbury’s has said customers are delaying spending ahead of this month’s Budget and cautioned against hitting retailers with further tax hikes that could send food prices even higher. Chief executive Simon Roberts said shoppers are being “cautious” amid uncertainty of what may come in the November 26 Budget, with Chancellor Rachel Reeves’s speech on Tuesday widely being seen to have set the stage for tax hikes. He said: “There will be some delayed spending until all of the news of the next few weeks comes through.” Mr Roberts also echoed calls from others in the sector for Ms Reeves not to punish the sector with any further tax or costs pressures after it was hit with a rise in national insurance contributions in April, which has cost the chain an extra £140 million. New regulatory costs on packaging have also added “tens of millions” to its costs, according to Mr Roberts, with the combined impact seeing the industry put up prices in response. He said: “The inflationary pressures on cost base have been significant this year… what we don’t want to see is further impacts that may cause further inflation. “No-one wants to see inflation go any higher.” His comments come after Marks & Spencer boss Stuart Machin said on Wednesday that Ms Reeves’s pre-Budget speech had fuelled customer worries over tax hikes and he warned shoppers are now “planning for the worst”. Mr Roberts said retailers had been consulted by the Government in recent weeks ahead of the Budget and had made the case against extra business rates on large shops. “We’ve been very clear about the pressures the retail industry is under,” he said. Half-year results from Sainsbury’s on Thursday saw the supermarket upgrade its annual outlook, saying it is now set for retail earnings of more than £1 billion after a better-than-expected half-year performance. The UK’s second largest grocer, which also owns the Argos chain, reported an underlying operating profit of £504 million for the 28 weeks to September 13, up slightly on last year’s £503 million and better than the group had forecast. Pre-tax profits lifted 5% to £271 million. Sainsbury’s had previously said retail earnings would remain flat over the full year, at around £1 billion, due to intensifying competition from rivals on price and a surge in costs. But in its interim results, the group said: “While we will continue to make balanced choices to invest and sustain the strength of our competitive position through the most important trading period of the year, we now expect retail underlying operating profit of more than £1 billion.” Like-for-like sales across the group, excluding fuel, lifted 4.3% in its second quarter, down from growth of 4.6% in the previous three months, but seeing a 4.5% rise over the first half as a whole. Sainsbury’s sales grew 5.5% in the second quarter, with growth in food accelerating to 5.7%, although its clothing and general merchandise division saw sales growth halve to 2.1% in the quarter. Argos sales growth pared back to 0.1% in the past three months, down sharply on the 4% rise notched up in the first quarter as it said the business was trading in a “subdued, competitive and deflationary market” and came up against strong trading a year earlier when clearance sales boosted its performance. The group revealed talks in September to sell Argos to Chinese e-commerce giant JD.com, but discussions swiftly collapsed over a failure to agree on terms and price. The firm is cutting costs by £1 billion over the next three years as it looks to offset soaring costs. Over the first half, it closed the remainder of its in-store cafes and scrapped hot food, pizza and patisserie counters in a move that saw it axe more than 3,000 jobs.
