* 2020-21 underlying pretax profit falls to 356 mln pounds
* Grocery sales up 7.8%, online sales double
* Says starts new financial year strongly
* Comfortable with profit forecasts of 620 mln pounds
(Adds details)
LONDON, April 28 (Reuters) - British supermarket chain
Sainsbury's reported a 39% fall in annual underlying
profit on Wednesday as strong food sales during the COVID-19
pandemic were outweighed by extra costs and a decision to forgo
business rates relief.
But Sainsbury's, the country's second largest supermarket
group after Tesco, said it had started its new
financial year strongly and forecast a big rebound in profit.
The company made an underlying pretax profit of 356 million
pounds ($494 million) in the year to March 6, in line with its
guidance of "at least" 330 million pounds but down from the 586
million pounds it made a year earlier.
Grocery sales rose 7.8%, general merchandise sales were up
8.3% and online sales doubled, but the company said it incurred
an extra 485 million pounds in costs due to the pandemic.
It also returned business rates relief offered by the
government worth about 410 million pounds.
Shares in Sainsbury's have increased 7.4% so far this year,
partly buoyed by bid speculation after Czech billionaire Daniel
Kretinsky increased his holding to 10%.
Sainsbury's three major domestic rivals - Tesco, Asda and
Morrisons - have all enjoyed strong sales over the last
year as coronavirus restrictions closed the hospitality sector
for long periods and forced many people to work from home.
However, they have also had to endure the costs of
additional workers, staff sick pay and in-store measures to deal
with the pandemic.
Earlier this month, Tesco reported a 20% drop in annual
profit, while last month Morrisons reported a halving of
profit.
Sainsbury's said like-for-like sales, excluding fuel, rose
11.3% in its fiscal fourth quarter, having increased 8.6% in the
third.
It said it was comfortable with analysts' consensus
forecasts for underlying pretax profit in 2021-22 of about 620
million pounds.
"Like our customers, we are all looking forward to things
feeling more normal over the coming months and getting excited
about a summer of celebration, but we are also cautious about
the economic outlook," Chief Executive Simon Roberts said.
Sainsbury's upgraded its four-year net debt reduction target
from 750 million pounds to at least 950 million pounds and is
paying a full-year dividend of 10.6 pence.
($1 = 0.7204 pounds)
(Reporting by James Davey; Editing by Michael Holden, Jason
Neely and David Clarke)
