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UK: Sainsbury’s half-year profits up 5% to £373m

09:41 14 November 2012

Sainsbury

Sainsbury's today reported 5% growth in first-half profits

SAINSBURY’S continued to show its rivals a clean pair of heels today after it reported a 5% rise in half-year profits to £373million.

The supermarket giant, which recently achieved its highest market share for a almost a decade at 16.7%, achieved like-for-like sales growth of 1.7% for the six months to September 29.

With competition fierce and households struggling to make ends meet in the economic crisis, Sainsbury’s said it had printed nearly 250 million Brand Match money-off coupons since the scheme’s launch a year ago.

Chief executive Justin King said the company’s focus on product quality and service standards also continued to pay off.

The performance contrasts with lacklustre results from Tesco, whose profits slid 12% to £1.1 billion last month, while in recent days Morrisons, Britain’s fourth largest supermarket, said like-for-like sales fell 2.1%.

Sainsbury’s, which has more than 1,000 stores, said it is 85% of the way through the launch of 6,500 new or improved By Sainsbury’s products, while its general merchandise and clothing business is growing three times faster than its food business in a drive for market share.

It also said its online business continued to perform strongly, growing at over 20% with online grocery orders regularly exceeding 165,000 a week.

During the half year Sainsbury’s opened five supermarkets and 49 convenience shops and extended three stores.

Mr King, who described the Brand Match scheme as the most comprehensive tool in the market, expects Christmas to be competitive but said the company’s Nectar loyalty card scheme should help it be more targeted with its promotions.

He said: “For us it is about doing it one customer at a time, giving them what they really want rather than general blanket promotions.”

Kate Calvert, retail research analyst at Seymour Pierce, said yesterday’s rising inflation number was a reminder that consumer spending would remain under pressure, with increased energy prices this winter yet to come.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, added that although the medium-term outlook was on a knife edge, the update provided some comfort that Sainsbury was maintaining its positive trajectory.

But he added that Tesco was in the midst of a substantial investment programme and remained the market leader by some distance.

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