SAINSBURY'S, the supermarket giant, is set to ring up annual profits of almost £500 million after strong fourth-quarter numbers showed it was managing to fight off a resurgent Morrisons.
The group's like-for-like sales in the 12 weeks to 22 March, excluding fuel, were up 4.1 per cent on a year earlier – topping City forecasts for a 3.7 per cent improvement.
It marks the chain's 13th consecutive quarter of growth and rounds off a t
hree-year recovery plan launched by chief executive Justin King.
The "Making Sainsbury's Great Again" programme – established in March 2005 – has delivered £2.7 billion of sales growth over the three-year period, compared with original hopes for a £2.5bn gain.
Over the year to March, the group has notched up like-for-like sales growth of 3.9 per cent, putting it on track for annual pre-tax profits of about £480m, according to City estimates.
Such a result is a far cry from the first-ever loss made by the business in its 2004-5 financial period. Last year, it managed to turn that £238m deficit into profits of about £100m.
Despite the steady sales performance, shares in Sainsbury's have lost about a fifth of their value this year amid concerns about consumer spending, higher interest rates and competition from rivals Tesco, Asda and Morrisons.
The stock is the worst performer among European supermarket groups in the DJ Stoxx index of European retailers in the month to date.
However, the strong fourth-quarter numbers suggest Sainsbury's business has not suffered as was expected next to a resurgent Morrisons – a key reason behind Sainsbury's weak share performance in recent days.
Industry figures put Sainsbury's share of the UK grocery market at 16.4 per cent, ahead of Morrisons but just behind No 2 Asda. Market leader Tesco holds 30.9 per cent of the market.
Shares in Sainsbury's last night closed 6.4 per cent higher at 358p.
Richard Hunter, head of equities at stockbroker Hargreaves Lansdown, said: "There are clearly positives within the statement – market share has not reduced as some had feared, and there will be investors looking to buy into Sainsbury's defensive nature."
King described the current market as competitive, but said improvements positioned the group well to "meet the demands of what continues to be a challenging environment".
He added: "Non-food has significant growth potential as we implement our plans."
It is expected that non-food goods will generate about a third of the £3.5bn in additional sales that Sainsbury's hopes to achieve by 2010.
£1.2BN STORE SITE VENTUREA NEW £1.2 billion joint venture between Sainsbury's and property heavyweight British Land has been set up to hold and develop 39 superstores.
The deal is Sainsbury's biggest step yet in reorganising its sprawling property portfolio and will allow the group to buy more space for its expanding non-food business.
It comes six months after the collapse of a £10.6bn takeover approach for Sainsbury's by suitors who urged the company to follow rivals such as Tesco and release value from its property.
None of the stores in the new JV is in Scotland – an area of rapid expansion for Sainsbury's in recent months.
The full article contains 548 words and appears in The Scotsman newspaper.
