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Sainsbury’s profits ahead of expectations

Sainsbury’s has reported underlying full-year pre-tax profits ahead of expectations up 17.5% to £610m and said clothing was a “star performer” in non-food.

For the 52 weeks to March 20, total sales at Sainsbury’s, excluding petrol, were up 6.7% and like-for-like sales were up 4.3%. Underlying operating profit was up 8.9% to £671m.

Sainsbury’s staff will share a bonus pot of over £80m.

The grocer said its non-food business is growing at three times the rate of food, with its TU clothing range a “star performer”. Womenswear “grew well” during the year it said, with major highlights from footwear, accessories and lingerie. Kidswear “grew strongly” and the grocer said that it was now the seventh largest kidswear retailer in the UK by volume.

It said: “Supermarket operators currently account for less than 15% of the £166bn UK non-food market and the scale of the opportunity is therefore considerable. We compete with non-food retailers and our focus on high street style at supermarket prices resonates with customers.”

Sainsbury’s is stepping up plans for store extensions, and completed 13 larger extensions in the year. It expects to add 15 to 20 extensions per year with 70 planning consents already held. It expects this will double to 40% the proportion of the population within a 15-minute drive time by 2014.

The grocer added: “When we extend a store it generates uplifts in both food and non-food sales, becoming a destination store for both product ranges, that customers will travel longer to visit.”

Sainsbury’s has also opened a new sourcing office in Shanghai to complement its main operation in Hong Kong and has established a second clothing depot in Bedford to support its Coventry depot. This has doubled its clothing warehouse capacity and will help meet increasing demand for clothing.

Chairman David Tyler said: “The board is pleased with the performance of Sainsbury’s over the last year. We have delivered sales growth ahead of the market and good profit growth with underlying earnings per share up over 12%.

“Our progress in achieving our strategic objectives has been strong, particularly on growing space and developing our complementary non-food offer. At the same time, our values continue to underpin everything we do, with our focus on customer service and responsible trading.”

Separately, Sainsbury’s has agreed to fund its pension requirements through a mixture of property assets and direct contributions.

 

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