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Sainsbury's profits fall but Tu sales continue to grow

Sainsbury’s has reported a 6.3% drop in underlying profit before tax to £375m for the 28 weeks to September 27, but clothing arm Tu increased sales by 13%.

New chief executive Mike Coupe said the “challenging” retail environment had created a “perfect storm” for supermarket retailers but insisted that there are opportunities for the business, including growing Tu, which had a 13% rise in sales during the period.

Like- for- like sales at the supermarket fell 2.1% for the half while underlying group sales were down 0.3% to £1.3bn.

The retailer did not break down figures for its fashion business, but said Tu offers “significant growth opportunities”.  

“Clothing and general merchandise are both growing at over 5% per annum and we expect to continue to deliver high growth rates given our relatively low market shares. Our focus on ‘high street style at supermarket prices’ and our successful, ongoing partnership with Gok Wan has helped us increase market share and drive double-digit sales growth.”

Sainsbury’s now offers clothing in 420 of its supermarkets and is the seventh largest clothing retailer by volume and 11th by value in the UK. Its clothing business has doubled in size to around £750m since 2008.

New chief executive Mike Coupe said: “Our strategy is evolving to address the continuing shifts in customer shopping patterns which we believe will lead to a greater emphasis on product quality and ease of shopping, and an increase in multichannel shopping.

“We have examined every aspect of our business and have good foundations for future growth in our supermarket and convenience estates, our online and non-food businesses and in Sainsbury’s Bank.”

George Scott, senior consultant at Conlumino said: “Sainsburys’ wider push on non-food is a wise one. It is developing a strong presence in clothing and focusing on growth spots in homewares – which links well to its core grocery offer. It is also making a greater play on seasonal products, which is an area it can easily flex its merchandising space to.”

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