Sainsbury’s Reports Good Sales and Profit Growth

07 May 2014 --- UK supermarket chain Sainsbury’s has reported a 16.3% rise in annual pre-tax profits to £898m, for the year to 15 March, compared with £772m for the previous year. However, like-for-like sales, which don’t include trading figures from new stores or fuel, rose by just 0.2%. The retailer confirmed it had maintained its 16.8% market share despite the tough retail environment.

In a statement the retailer said: “Our own-brand ranges and our focus on the quality and integrity of our food give us a clear competitive advantage. In both sales and volumes, own-brand is growing at over twice the rate of branded goods. The re-launched by Sainsbury’s range now has over 7,000 lines, while Taste the Difference is showing double-digit growth and has achieved over £1.1 billion in annual sales.”

It also said it had compelling general merchandise and clothing ranges. “Sales are increasing at over twice the rate of food, and our non-food ranges are now on sale in over 400 stores; 34 per cent of our customers can now access, within a 15 minute drive, the full non-food offer compared with just 11 per cent six years ago. The relaunch of our Tu clothing brand represented the single biggest investment in our clothing business since 2004, and Tu generates annual sales of approximately £750 million.”

For its complementary channels and services the retailer said: “In our convenience channel, great locations and an emphasis on fresh food have helped us deliver sales growth of around 19 per cent. Our convenience stores now account for a third of Britain’s convenience market growth. Our groceries online business grew sales by over 12 per cent and achieved over £1 billion in annual sales. This year we re-platformed our groceries online website to improve customer usability and customer satisfaction is at an all-time high. We acquired the remaining 50 per cent shareholding of Sainsbury’s Bank from Lloyd’s Banking Group on 31 January 2014.”

Sainsbury’s has also been developing new business. “Our 275 in-store pharmacies carried out over 290,000 consultations last year. Sainsbury’s Energy has more than 60 per cent more customers than last year as people seek out the best deal on the market. Our Sainsbury’s Entertainment website has moved to a completely on-demand model.”

The retailer has also been growing space and creating property value. “We opened 13 supermarkets and 91 convenience stores, and extended six supermarkets, meeting our target of adding one million square foot of additional space, with full year core capital expenditure of £888 million (excluding Sainsbury’s Bank) below previous guidance of £1.1 billion. Our property portfolio now has a market value of £12.0 billion. This year we delivered profits of £52 million and over the past five years we have raised £1.2 billion through disposals, realising property profits of over £335 million. As announced at our interim results, following a review of our property pipeline we have identified some sites where we no longer wish to build a supermarket, resulting in £92 million impairment within one-off items.”

Chief executive Justin King said: “While the general economic outlook is showing some signs of improvement, conditions in the food retail sector are likely to remain challenging for the foreseeable future as customers continue to spend cautiously. We remain committed to investing for the future and continue to see significant opportunities for growth. We remain confident that our differentiated offer, supported by the ‘value of values’, Nectar data and Brand Match, will allow us to outperform our peers in the year ahead. 

“After ten wonderful years at Sainsbury’s, I will leave the business at our AGM in July and will hand over to Mike Coupe, our Group Commercial Director. I am delighted that Mike will lead Sainsbury’s on the next phase of its journey. Mike played an instrumental role in our ‘Making Sainsbury’s Great Again’ plan and is ideally equipped to lead Sainsbury’s as the Company continues to develop and grow in tune with the changing consumer and industry environment.”