Sainsbury’s profits poised to put rivals in the shade

By SCOTT REID
Published on 11/11/2012 00:00

A CONTROVERSIAL price matching scheme and its sponsorship of the Paralympic Games will allow Sainsbury’s to put its rivals in the shade.

The country’s third biggest supermarket operator was the star performer in recent data from researcher Kantar as its share of the market jumped to 16.8 per cent while Tesco and Morrisons – the number one and number four players respectively – saw their positions weaken.

It is expected to build on its strong run in half-year results on Wednesday by unveiling a 
4 per cent rise in underlying pre-tax profits to about 
£370 million.

The group, which runs more than 1,000 stores, has benefited from its sponsorship of the Paralympics as well as its Brand Match scheme and higher investment in its own labels.

Under the scheme, if branded goods are cheaper at Tesco or Asda, the customer receives a voucher from Sainsbury’s. However, the firm was recently ordered to change the campaign by the advertising watchdog, which found it misled consumers over the finer details.

The Advertising Standards Authority is understood to have received 20 complaints, including one from Tesco.

The City will be looking for long-term growth plans as much of Sainsbury’s recent expansion has been driven by one-off benefits, such as the London Games.

However, the grocery giant has also seen a good performance from its top-end Taste The Difference range, as consumer spending power gradually recovers.

Caroline Gulliver, a retail analyst at Espirito Santo Investment Bank, said: “It seems that Sainsbury’s has managed to keep its momentum with its successful Brand Match initiative.

“This, in addition to investments in online and convenience, seems to be helping it to outperform the competition.”

Kate Calvert at Seymour Pierce added: “We expect the shares to see profit taking as inflation comes back in the ­industry.”