Sainsbury's results buy CEO Coupe some breathing space after Asda deal failure. Here's why it may not last

Sainsbury’s boss Mike Coupe needed to pull a rabbit out of his hat after his attempt to merge the grocer with Asda was blown up by the Competition & Markets Authority.

With his full year numbers, he found one. It’s just that a fluffy bunny is not the sort of thing that can be relied upon to keep the wolves from the door for long.

The numbers Coupe unveiled contained much of what the City, which doesn’t tend to look much further than the end of its own nose, tends to coo over.

Underlying profits - which strip out all sorts of nasties such as the £48m blown on the failed Asda experiment - were up 7.8 per cent at £692m and so (crucially) was the dividend. Debt was down, ditto underlying costs.

It was better than analysts had expected and lit a fire under the shares, which were the biggest gainers on the FTSE 100 early on.

But all those apparently fresh looking numbers need a little context. Let’s start with the shares. They’ve been bouncing around at near 30 year lows. Set against that, a 4 per cent boost to the price is like scoring a consolation goal in injury time to ease the pain of being down by five.

Then there’s the “underlying” number Sainsbury’s was so keen for people to focus their attention on. It excluded fully £396m worth of supposedly “one off” items.

In addition to the money the company blew on the deal, Sainsbury’s listed costs relating to guaranteed minimum pensions, retail restructuring, “Sainsbury’s Bank transition”, and the integration of Argos into the business.

After factoring them all in, profits slumped by 41.6 per cent to just £239m. That’s a lot less fluffy than the underlying number Coupe was so keen to show off.

It has risen for two years in a row but pre tax profits have been down for three. Given how regularly these “one offs” are hitting Sainsbury’s, how much meaning does that underlying number really have?

One that does have meaning is like for like sales, which looks at stores open at least a year to gauge how well they’re doing, while stripping out fuel, the price of which is very volatile and so has a tendency to distort the figures.

They fell by 0.2 per cent, marking Sainsbury’s out as a slowcoach when compared to its main competitors. Kantar’s authoritative retail survey has shown the group consistently losing market share. Sainsbury’s complains that it doesn’t include Argos and general merchandise in its numbers but the same is true for, say, Tesco, which has been doing a lot better when it comes to what Kantar does include.

Beauty is in the eye of the beholder when it comes to corporate results and the City decided it fancied these ones despite the issues I’ve raised. Coupe has bought himself some breathing space. It will, however, prove temporary if he can’t stop Sainsbury’s from wilting. Make no mistake, that’s what it has been doing while he’s been he’s been off trying to strike a mega deal.