Sainsbury's Coupe says he will stay after Asda deal fails

Sainsbury’s boss Mike Coupe said he intended to stay in the job following his failed attempt to buy Asda as costs related to the deal contributed to a fall in annual profit.

The competition regulator blocked the takeover last month, leaving some analysts questioning Coupe’s future after stressing the importance of the deal to compete in a fiercely competitive grocery market.

Asked if his future was in doubt, Coupe told the BBC: “You will be talking to me again I’m sure. I’m sticking to the company. I’m very proud of the organisation I run.

“We draw a line under the past. The regulators blocked the deal. We think our business is adapting to the changing world of retail.”

Sainsbury’s pre-tax profit for the year to 9 March dropped 41.6% to £239m. Non-underlying items more than doubled to £396m including £46m of costs related to the attempt to buy Asda from Walmart and £98m of pension expenses.

Underlying pre-tax profit rose 7.8% to £635m as group sales increased 2.1% to £32.4bn. Analysts had on average expected profit of £626m. Like-for-like sales excluding fuel fell 0.2%.

Sainsbury's shares rose 5.8% to 235.45p at 08:40 BST.

Coupe told the BBC: “There have been a number of restructuring costs and a number of non-cash accounting items but this is a good set of results.” He backed up his commitment to Sainsbury's by spending £230,000 on 100,000 of the company's shares. Finance chief Kevin O'Byrne bought 70,000 shares.

Sainsbury’s tried to buy Asda to compete more aggressively with the German discounters Aldi and Lidl and its UK rivals Tesco and Morrison, which have revived after periods in the doldrums. Coupe criticised the Competition and Markets Authority’s rejection of the deal, which the regulator said would be bad for customers.

Sainsbury’s said retail markets were “highly competitive and very promotional” and that the outlook for consumers was uncertain. The results statement did not mention the failed £7.3bn Asda deal apart from reporting the costs incurred.

Independent retail analyst Nick Bubb said: "The City was nervous that today’s finals might bring bad news and profit downgrades, with the weakness of the business exposed after the failure of its Asda merger plan. But the embattled CEO Mike Coupe has come out fighting, delivering better than expected underlying full-year profit."

Sainsbury’s declared a final dividend of 7.9p a share, taking the annual payout to 11.0p – an increase of 7.8%. The company said it would cut net debt by £600m over the next three years.