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Supermarket chain Sainsbury's said it would pay a special dividend in lieu of a final dividend, after forecasting pre-tax profit to be at least 5% higher than last year, reflecting stronger than expected sales, particularly at Argos.
The dividend of 7.3p is aligned to policy of 1.9x full year dividend cover by underlying earnings.
The company also detailed plans to slash 3,500 jobs amid efforts to rein in costs.
The supermarket also reported retail sales were up 7.1% in the first half of the year, driven by growth in digital and online grocery sales, according to its interim results.
Digital sales accounted for almost 40% of all sales, online groceries was up 102%, while fuel sales plunged 44.6%. The supermarket posted a loss before tax of £137 million, reflecting £438 million of one-off costs associated with Argos store closures and other strategic and market changes.
Sainsbury's spent around £290 million to protect customers and colleagues from COVID-19, partially offset by £230 million business rates relief.
The company expects its current assumptions would result in full-year group underlying profit before tax increasing by at least 5% year on year.