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Sainsbury's Faces £140 Million Hit from National Insurance Hike, Warns of Rising Inflation


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Posted

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Sainsbury's, one of the UK’s largest supermarket chains, is facing significant financial challenges following recent budget measures that will add a £140 million burden to its operating costs. Chief Executive Simon Roberts warned that this increase, stemming from the hike in employers' national insurance contributions, is likely to lead to further inflation and potentially tough choices for the company.

 

Roberts noted the financial strain that the increased national insurance contributions will impose, saying, "This impact on national insurance was unexpected and is coming in fast, it will have a very significant impact, it will impact our costs base... and our suppliers' cost base." This unexpected financial weight will come into effect in April, following Chancellor Rachel Reeves' announcement in last week’s budget.

 

The Sainsbury’s CEO expressed concerns about the inflationary impact of these new costs, noting that they are beyond what the company can absorb. "There’s a barrage of costs," he said, highlighting that Sainsbury’s customers might ultimately bear the financial brunt of these changes. Roberts pointed to the analysis of the Office for Budget Responsibility (OBR), an independent forecaster, which suggested that Reeves’ budget measures will drive inflation higher than originally anticipated. "It’s difficult to disagree with" the OBR’s assessment, Roberts added.

 

In addition to the national insurance increase, the new budget also raised the national minimum wage, another factor contributing to overall cost increases. While Roberts did not put a specific number on how much these changes would inflate prices, he acknowledged the growing pressure, saying, "There’s a lot of pressure in the pipeline... there’s pressure in the system in inflation already."

 

Roberts expressed disappointment over the budget's impact on business rates as well. Many businesses had anticipated a reduction in these rates, but instead, they are now expected to rise next year. Roberts commented, "Business rates will go up this year. I certainly didn’t expect them to go up next year; I expected them to go down."

 

As for the potential impact on Sainsbury’s workforce, Roberts stated that it is "too early to be specific," but he acknowledged that "difficult decisions" would likely have to be made. Although he did not elaborate on whether these decisions could involve staffing changes, he hinted that the combination of rising national insurance, minimum wage costs, and other pressures may lead to unavoidable adjustments in operations.

 

Sainsbury’s is not alone in dealing with the implications of the new budget. Other major UK companies have reported similar concerns. JD Wetherspoon, the pub chain with more than 1,000 establishments, announced that the budget measures would increase its costs by £60 million next year. Marks & Spencer, another prominent UK retailer, expects to see a £120 million impact on its finances. These announcements highlight the widespread concerns across the retail and hospitality sectors, which are grappling with the same financial pressures as Sainsbury’s.

 

Based on a report by Sky News 2024-11-09

 

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Posted
1 hour ago, JonnyF said:

 

No worries.  Plenty of cash in peoples pockets after 40 billion of tax rises they promised not to do. 

 

It's not like there is a cost of living crisis or anything.

 

Tax and spend. Ruin the economy. Labour 101. 

 

They hate Britain. In order to change a society you have to first destroy and then rebuild it. Communist philosophy. They only have 4 years. They have to do as much damage as possible. 

 

 

 

Reckon Keir will be booted out in the next 18 months.

he is becoming so unpopular.

Wonder who would replace him.

 

 

 

  • Haha 2
Posted
Just now, JonnyF said:

 

Lammy?

 

Rayner?

 

😁

 

Lammy, that would just be to funny.

  • Like 1
Posted
2 minutes ago, mokwit said:

There is just no limit to Leftie ignorance about business, is there?

 

Supermarkets are high turnover, low margin businesses and it is Profit/cashflow that counts more than revenues (simplifed for the Lefties reading this).

 

'In the financial year ending March second in 2024, Sainsbury's recorded a profit of 277 million British pounds before tax and 137 million British pounds after tax. Although a decrease on the previous year, this still marked a significant improvement from 2020/21, when the company experienced a loss.'

 

GBP 140mn in extra NI is is MORE than their after tax profit.

 

Perhaps Sainsburys can park their £150million share buy back.

 

https://www.about.sainsburys.co.uk/news/latest-news/2024/07-11-24-interim-results-for-the-28-weeks-ended-14-september-2024

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Posted
13 minutes ago, mokwit said:

There is just no limit to Leftie ignorance about business, is there?

 

Supermarkets are high turnover, low margin businesses and it is Profit/cashflow that counts more than revenues (simplifed for the Lefties reading this).

 

'In the financial year ending March second in 2024, Sainsbury's recorded a profit of 277 million British pounds before tax and 137 million British pounds after tax. Although a decrease on the previous year, this still marked a significant improvement from 2020/21, when the company experienced a loss.'

 

GBP 140mn in extra NI is is MORE than their after tax profit.

 

You're right on those thin margins:

 

Industry sources said the pressure on pricing would be "intense" given the thin margins on which the big supermarkets already operate.

https://news.sky.com/story/retail-giants-face-food-price-hikes-dilemma-after-budget-13248254

 

"The grocery industry is expected to be among the hardest-hit by the changes to employer NICs, particularly after the chancellor slashed the threshold at which businesses become liable for it to just £5,000."

 

Its not only the large stores either:

 

Andrew Goodacre, CEO of the British Independent Retailers Association

“This is without doubt the worst Budget for independent retailers I have seen in my time representing the sector. The government’s actions today show complete disregard for the thousands of hard-working shop owners who form the backbone of our high streets.

https://www.theretailbulletin.com/general-merchandise/budget-comment-retail-trust-30-10-2024/

 

“Retail employs three million people and 2.7 million more across supply chains, driving investment in jobs, communities and, ultimately, economic growth, right across the country. For a low margin industry, today’s Budget will hit hard, with the odds now stacked firmly against growth and investment in the short term. These new costs also risk increasing the prices customers pay at the till.

 

  • Agree 1
Posted
26 minutes ago, Chomper Higgot said:


It might be a good idea to wait until the impact of spending £Billions more on the NHS / schools and the increase in the minimum wage take effect.

 

Oh pensioners still enjoying the triple lock too.

 

If they survive the winter!

  • Like 2
Posted
26 minutes ago, Chomper Higgot said:

Oh they’ll survive, fuel costs are down and pensions are up.

 

 

Energy prices increased 10% in October. They are going up again in the new year.

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Posted
2 minutes ago, Chomper Higgot said:

 

Considerable lower than prices where during the peak when people, not just pensioners, across the U.K. struggled to heat their homes:

 

https://procurementgroup.co.uk/market-report/7th-march-2024-energy-price-alert-uk-gas-uk-electricity-2/

Prices are generally lower in spring, which is what your article confirms.

 

What prices were before doesn't  affect the ability for some to pay their bills now. There was also assistance for all, not just pensioners, last year. Not so now.

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Posted
1 hour ago, James105 said:

 

That doesn't even include the additional business rates they face on their 2300 stores, as well as the increase in minimum wage.  Someone even suggested that they should be paying a windfall tax if they dare to increase prices so they don't make a loss!  Prices will have to go up and the poorest will definitely suffer for this.    It will be an important life lesson though for those who did vote for Labour and are now regretting it.   I doubt that the £22bn being spaffed away on carbon capture or the £11bn going to Africa for climate aid will give them much comfort when at the till paying for their more expensive groceries.    


Well at least folk on the minimum wage will have a bit more money I their pocket,  or dies that too offend you?

 

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Posted
1 hour ago, youreavinalaff said:

Prices are generally lower in spring, which is what your article confirms.

 

What prices were before doesn't  affect the ability for some to pay their bills now. There was also assistance for all, not just pensioners, last year. Not so now.


So is the  price of energy is way lower than the peak?

 

 

  • Like 1
Posted (edited)
4 minutes ago, Chomper Higgot said:


Well at least folk on the minimum wage will have a bit more money I their pocket,  or dies that too offend you?

 

To quote Harold Wilson:

 

"One man's wage increase is another man's price increase".

 

Whether ir not those on minimum wage will end up better off, is debatable.

Edited by youreavinalaff
Posted (edited)
3 minutes ago, Chomper Higgot said:


So is the  price of energy is way lower than the peak?

 

 

When taking the financial help previously available into account.

 

NO.

 

The bills people are paying now are higher.

Edited by youreavinalaff
  • Like 1
Posted
21 minutes ago, youreavinalaff said:

When taking the financial help previously available into account.

 

NO.

 

The bills people are paying now are higher.

Surely that depends upon how much energy  consumer were using while in receipt of subsidies.

 

 


 

 

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