Sainsbury's unveiled plans to cut its full year dividend after full-year like-for-like sales and profit before tax both declined because of difficult trading conditions, even though the group still managed to beat expectations.
In the 52 weeks to 12 March, the FTSE 100 retailer posted a 13.8% year-on-year decline in underlying profit before tax, while like-for-like sales excluding fuel fell 0.9% and total group sales dropped 1.1% from the year before to £25.83bn.
The group, Britain's second-biggest grocer, added its operating profit tumbled 11% from the corresponding period in 2015 to £700m, a figure that was slightly higher of analysts' expectations for a £683.4m reading.
Despite the decline in both profit and sales, Sainsbury's said it outperformed its peers over the last 12 months but revealed it will cut its final dividend by 1.2% year-on-year to 8.1p, meaning at 12.1p its full-year dividend will be 8.3% lower than last year.
Sainsbury's, which last month clinched a £1.4bn deal for the takeover of Argos owner Home Retail, added its statutory profit before tax jumped to £548m from a £72m loss in the year before, and group chief executive Mike Coupe claimed the group remained on the right track.
"We continue to outperform our main supermarket peers and maintain market share in a competitive, deflationary environment," he said.
"We believe we have the right strategy in place and are taking the right decisions to achieve our vision to be the most trusted retailer where people love to work and shop."
Coupe attributed the decline in sales to the ongoing price war among Britain's biggest supermarkets, which he expects to last for the foreseeable future.