J Sainsbury posts profits increase
Non-food items grow at three times rate of food
By CFOWorld.co.uk | CFO UK | Published 12:51, 10 November 10
J Sainsbury posted strong profits on Wednesday up 8.1 percent to £332 million, outperforming the market with increased market share helped by the relaunch of its own brand products and growth in non-food items.
An acceleration in Sainsbury's expansion plans helped the UK’s third largest supermarket cope with a tough economic outlook, the chief executive said on Wednesday.
Chief Executive Justin King said “further productivity savings, tight control on operating costs, together with our strong sales performance have all helped to deliver good profit growth”.
The government's ambitious plans to cut public spending has retailers concerned that the hit would deter consumers from spending in the months ahead. However Sainsbury's CEO said it was upbeat on its future prospects.
"We're in a good position to continue to perform well, notwithstanding that tough environment," King told reporters on a conference call, after the company reported first-half profit which met analysts' forecasts.
Sainsbury is opening new stores outside its heartlands in the south of England, as well as expanding online and into convenience shopping and non-food ranges such as clothing.
Total sales rose 7 percent to £11.94 billion in the six months to 2 October 2010 compared with sales of £11.16 billion for the same period last year.
The interim dividend was up 7.5 percent to 4.3 pence a share.
The group said non-food ranges such as clothing and homewares grew at three times the rate of food, while online grocery sales were up over 25 percent and convenience store sales surpassed £1 billion.
Finance Director John Rogers said he was also comfortable with analysts' full-year profit forecasts of about £660 million and said this would equate to a tick up in the margin improvement to between 17 and 18 basis points.
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