Sainsbury’s (LON:SBRY) reported a 9 percent fall in first half profits on Thursday, sending shares down over 2 percent at market open.

Like-for-like sales excluding fuel rose by 1.6 percent over the six months to September, a sharp slowdown from the 2.3 percent growth seen in the previous period. Whilst the company said that its cost cutting plan is ahead of schedule and that it plans to make a further £500 million of savings during the next three years, profits came in well below expectations at £251 million over the period.

The supermarket attributed the fall in profits to price cutting, wage cost inflation and the consolidation of its takeover of Argos. The deal, which was completed last year, weighed on the Sainsbury’s figures for the quarter but did contribute to a 15.9 percent increase in total revenues to £14.6 billion.

Chief executive Mike Coupe said he was “pleased with the progress” the store had made, adding that “we’re probably through the worst, if the truth be told”. On the subject of price inflation, a big problem for the Big Five UK supermarkets as they struggle to compete with budget rivals such as Lidl and Aldi, Coupe said:

“Even today’s prices are about the same as they were two years ago, so we as a business have done a very good job of protecting our customers from the more extreme challenges of inflation and the currency movements.”

The company said its full-year profit forecast remained “in line” with market expectations. However, Sainsbury’s share price dropped as the news was released, currently trading down 1.97 percent at 228.90 (1111GMT).