British supermarket group Sainsbury's estimated a profit impact of 500 million pounds ($623 million) from the coronavirus pandemic and said it would defer any dividend payment decisions until later in the financial year.
Sainsbury's, number 2 to market leader Tesco, said on Thursday that under its base case scenario the hit to profit would be broadly offset by stronger grocery sales and approximately 450 million pounds in business rates relief from the UK government.
That would mean group underlying profit before tax for the year to March 2021 would be broadly unchanged from the 586 million pounds reported for the 2019-20 year, it said.
Sainsbury's base case assumes that lockdown restrictions would have eased by the end of June, but that the business would continue to be disrupted until mid-September. It also assumes that consumer demand, particularly for general merchandise and clothing, would be impacted by weaker economic conditions thereafter.
Profit would be hit by significant costs associated with social distancing and safety measures to protect customers and staff, weaker sales of fuel, general merchandise and clothing, and lower financial services profitability, it said.
"Given the wide range of potential profit and cash flow outcomes, the board believes it is prudent to defer any dividend payment decisions until later in the financial year, when there will be improved visibility on the potential impact of COVID-19 on the business," it said.
Sainsbury's confirmed the results would be the last presented by Chief Executive Mike Coupe, who will step down as CEO on May 31. He will be succeeded by Simon Roberts, the current retail and operations director.