Sainsbury’s and WH Smith among latest firms facing Iran war impact

Sainsbury’s and WH Smith have become the latest major UK brands to flag pressure on shoppers from the conflict in the Middle East.

The past week has seen a raft of household names, also including Primark and Tui, shed light on how consumers and businesses are faring in the midst of heightened uncertainty and cost pressure linked to the conflict.

On Thursday, Sainsbury’s warned that the war would “impact both our customers and our business” and said profits could fall this year as a result.

Sainsbury’s chief executive Simon Roberts said there “will be pressure on food prices” amid fears that the impact of the conflict on energy prices will drive up the cost of food production.

Mr Roberts called for the Government to provide energy support for the food sector as a result to help offset potential inflationary pressures.

Nevertheless, the boss said it had not yet seen a significant change in shopper behaviour following the conflict.

Sainsbury’s echoed major rival Tesco, which said last week that uncertainty related to the war was clouding its outlook for profits.

Both supermarkets said product availability was also still strong, but have engaged with the Government as it put together plans for worst-case scenario which could see the war lead to shortages of carbon dioxide used by the food industry.

However, it said has been in contact with the Government to help plan for a worst-case scenario which could see the ongoing war lead to shortages of carbon dioxide used by food producers.

A number of firms have already pointed towards heavier impacts from the conflict between US-Israeli and Iranian forces since it began in late February.

On Thursday, WH Smith cut its full-year profit outlook and halted shareholder dividend payouts following the impact of the war on air travel.

It said the conflict has led to pressure on passenger numbers and “weaker consumer confidence”.

Earlier this week, Primark also said it had seen the conflict drag on consumer sentiment.

Parent firm Associated British Foods reported weaker trading in April across the fashion retailer as pressure from Middle East conflict weighed on consumer sentiment.

Fellow retailer Shoe Zone also said it was coming under pressure from the conflict, highlighting “challenging trading conditions” linked to weaker consumer confidence.

The company, which has 259 stores, also said the Middle East conflict was also pushing up costs such as shipping and transport, which is set to impact its bottom line.

Other sectors have also seen companies link recent struggles to the conflict.

Travel giant Tui told shareholders earlier this week that the Iran war cost it around 40 million euros (£34.8 million) last month after it was forced to repatriate thousands of holidaymakers and staff.

Meanwhile, housebuilder Crest Nicholson slashed its outlook for sales and profits as it warned over the impact of the Iran war on costs and buyer confidence.

The group saw its shares plunge after it said it would deliver fewer homes this year and warned that this, plus rising build and energy costs because of the Middle East conflict, would see underlying earnings come in at a lower-than-expected £5 million to £15 million.