In recent weeks, supermarket spin doctors have been rolling out chief executives to counter Unite research that revealed how UK supermarkets are profiteering at the expense of their customers. The latest in this long line of protesting CEOs was Simon Roberts, chief executive of Sainsbury’s. He was asked on the BBC if the supermarket had been guilty of profiteering: “Absolutely not” was his strident denial. That denial lost some of its credibility this week when Sainsbury’s announced that Simon Roberts’ earnings leaped 40% last year to nearly £5m.
And there we have it. Facts will out. Roberts’ bonanza bonuses are actually a boardroom reward for the delivery of bumper profits in recent years. How else to explain it? Britain’s CEOs are never done telling us that their skyscraper salaries are index-linked to their blinding achievements delivering for shareholders.
It’s absolutely clear that workers and their families have been fleeced at the supermarket tills. Unite’s most recent research on profiteering found that, in 2021, the top three supermarkets – Sainsbury’s, Tesco and Asda – made a combined £3.2bn in profit. In the last two years alone, while the costs of living have soared, Tesco made £2bn profit. Not been profiteering? Who are they trying to kid?
In the same BBC interview in which he denied profiteering, the Sainsbury’s CEO also claimed, “We made less profit year on year because we made really conscious decisions to keep our prices as low as we could.” The inspection of supermarkets’ accounts by Unite’s forensic accountants contradicts such claims. Last year, Sainsbury’s gross profit “before non-underlying items” actually increased to £2.42bn from £2.36bn the previous year.
The drop in its final net profit was because of other factors – not solely food supply prices. For example, the company spent £106m on a “restructuring programme”. And a slice of that came from redundancy payments. In other words, the final drop in net profits was from additional spending on things like laying off Argos workers.
It’s not just Sainsbury’s that is trying to rebut accusations of profiteering. Others have rushed to the defence of Tesco, claiming its profits actually fell last year. As usual, the numbers tell a very different story. Tesco’s profits fell mainly due to a massive revaluation of its property portfolio after interest rates shot up last year, as well as rising “administration expenses”. Not because it has been “absorbing” increased food costs from its suppliers.
Despite the war in Ukraine and the cost of living crisis, the operating profit margins of Sainsbury’s and Tesco in 2022 were actually the highest in eight years. Does that sound like the result of two companies doing everything in their power to keep prices as low as possible in these unprecedented times?
And there’s more. Let’s look at dividends. Between them, Tesco and Sainsbury’s are paying out £1.2bn to their shareholders this year. Tesco plans to pay £859m in dividends; Sainsbury £319m. These are their highest “common” dividends since 2015. So the next time you reach aghast for the credit card to pay the supermarket bill, remember that at least you are contributing to the worthy causes of bonanza dividends and bumper CEO pay packets.
Greedflation is one of the great scandals of our times. The supermarkets are only part of a bigger picture. The British economy is blighted by the biggest epidemic of profiteering in business history. And it’s well past time something was done about it.
