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Solid Sainsbury’s sees profits rise in first half

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UK supermarket group Sainsbury’s has today reported solid figures for the first half of its financial year, with like-for-like sales and profit before tax up 1.9 per cent and 6.6 per cent year-on-year respectively.

Whereas Tesco has seen sales in non-food categories hold back its growth in the UK, resulting in a number of job losses, a trading statement released by Sainsbury’s this morning indicated that its clothing and general merchandise (GM) categories are driving the company forward.

In the 28 weeks to October 1st 2011, the UK’s third largest grocer reported total sales including fuel of £12.85 billion, while profits were up from £332 million in H1 2010 to £354 million.

Sainsbury’s said that its GM and clothing businesses continued to grow well at a faster rate than its grocery business, with the retailer’s aggressive expansion strategy resulting in 93 of its stores now providing a non-food sales area of over 10,000 sq ft. This is 26 stores up on last year.

Over the half-year period the company has also announced a partnership with TV fashion celebrity Gok Wan, which will see the designer create a number of womenswear ranges for the grocer’s Tu clothing range.

Meanwhile, the most recent trading period saw Sainsbury’s acquire online entertainment company Global Media Vault from MBL Group, which will help support its endeavours in the online and digital entertainment sector and build on last year’s launch of a dedicated Sainsbury’s Entertainment website.

David Tyler, Chairman of Sainsbury’s, commented: “We are pleased with our sales and profit performance, given the challenging economic environment.

“We have continued to make good progress against our five areas of focus, strengthening our position for the long term, particularly the investment in our food and clothing ranges as well as new channels and services.

“Our interim dividend is 4.5 pence, which is in line with our policy to pay this at 30 per cent of the previous year’s full-year dividend.”

Sainsbury’s store estate has grown by a gross 596,000 sq ft in the six months, with seven new stores (including two replacements), 15 extensions and 37 convenience stores opening and creating more than 2,700 new jobs in the process.

Some 15,000 seasonal jobs will be created this Christmas too, as the group’s supermarkets bring in reinforcements for their busiest period of the year.

Referring to the company’s most recent marketing campaign, CEO Justin King welcomed the firm’s positive performance against a tough economic backdrop.

He said: “We expect the economic environment to remain challenging for the foreseeable future but we are confident of further good progress in the Christmas period ahead and our ability to grow by continuing to do a great job in helping our customers ‘Live Well For Less’.”

Published on Wednesday 09 November by Editorial Assistant

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