Sample Essay

We can see major changes in the profit mix at Sainsbury. Supermarkets are now contributing significantly less than they were five years ago; Sainsbury’s bank is virtually operating at break even point since its profits are so small; Shaw’s supermarket division is returning ever increasing profits and the profit sharing part of the business is suffering as а result of the drop in the overall profitability of the business.

            The profit margins have seen weak growth; however this is not totally out of keeping with the retail sector. The figures certainly do not put Sainsbury’s at the top of the pile and given Sainsbury’s had been number one retailer for so long it suggests that all is not well and competitors are taking business away. There is no real indication of meltdown but figures such as liquidity and gearing show some signs of weakness. Supermarkets need to drive profits through sales/turnover and this is clearly proving difficult for Sainsbury’s.

It can be said that Sainsbury’s is currently performing ok but there are signs of financial problems to come. This table helps summarise some of these issues as it shows recent turnover dip as а worrying shift on top of some declining profitability, but the impact of cost controls is masking lost turnover. It is possible that cost-cutting has led to driving customers away.

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