SAINSBURY's romped in with its biggest quarterly underlying sales rise in two-and-a-half years yesterday, just ahead of the fifth anniversary of chief executive Justin King's stewardship.
Britain's third biggest supermarket group saw sales at shops which have been open for at least a year rise 6.2 per cent, excluding fuel, in the 11 weeks to 21 March.
That Q4 performance was up from 4.5 per cent in the third trading quarter and well ahead of a consensus City forecast of 5.5 per cent sales growth.
Clive Black, food retailing analyst at broker Shore Capital, commented: "A fabulous performance." He raised his full-year profit forecast for Sainsbury to 540 million from 524m.
King, who is five years at Sainsbury on Monday, said: "Customers are definitely shopping around more.
"We are perceived to be more expensive than we are. We think customers shopping around are beginning to see the reality of our prices."
King also deflected speculation that he might be lined up to succeed Sir Stuart Rose at Marks & Spencer.
He said: "I still think there's a lot of mileage in this business. I see myself being here for a long time to come."
Sainsbury's sales were also helped by higher food prices, although King said inflation only contributed about 3 per cent to growth as shoppers avoided the most-affected goods and cherry-picked promotions. Cash-strapped shoppers drove a rise of more than 60 per cent in sales of the firm's cheapest "basics" range, although King said this category was still only 3 per cent of overall sales.
Meanwhile, it flagged up an unspecified number of job losses at its London HQ as part of an ongoing "streamlining" of the group. It also revealed that it has planning applications in for a further ten main supermarkets in Scotland in 2009-10, on top of the 22 it already has north of the border. Sainsbury also recently acquired five supermarkets from the Co-op in Scotland.
Planned locations for the proposed new stores include Nairn, which would be Sainsbury's first store in the Highlands, Armadale, Crieff and Irvine.
Separately from this planned expansion, Sainsbury also said it would create 200 new management and store jobs in Scotland this year. They will be an unspecified mixture of full and part-time, a spokesman said.
It added that non-food sales maintained strong growth in Q4, with its Tu clothing range now available in 290 stores. Its online home shopping service saw sales growth of more than 20 per cent.
Richard Hunter, head of UK equities at stockbroker Hargreaves Lansdown, said: "Following on from a record Christmas performance, Sainsbury's continues to gauge the current mood of the consumer extremely well.
"The group's middle-of-the-market positioning, allied with a high profile advertising campaign (including celebrity chef Jamie Oliver], has borne fruit again."