Sainsbury's profits hit £665m on 21 million transactions a week

Published on Tuesday 10 May 2011 21:56

SAINSBURY'S yesterday claimed that a record 21 million transactions are passing through its tills each week as it posted a 9 per cent increase in underlying profits to £665 million.

About 124,000 staff at Britain's third-largest supermarket chain will share in a 60m bonus pot as a result of the better-than- expected annual profits, although the windfall is less than the 80m dished out last year.

The group said its efforts to keep prices low had continued to attract cash-strapped shoppers, despite the subdued consumer sentiment.

It has gained ground on its other "big four" rivals over the past 12 months, the firm said referring to industry data, with market share rising to 16.3 per cent in the 52 weeks to 20 March from 16.1 per cent previously.

Sainsbury's chief executive Justin King highlighted the company's particular progress in non-food sales, which increased at three times the rate of its food sales. Total sales, including VAT, jumped 7.1 per cent to 22.9 billion in the year to 19 March, with average customer transactions up by one million per week on a year ago.

The firm enjoyed particularly strong growth in areas such as books and DVDs, but Sainsbury's also claims that its TU clothing brand now qualifies as the seventh largest clothes retailer in the UK.

Its total share of the clothing, footwear and accessories market grew to 3.3 per cent during the 24 weeks to 20 March from 2.6 per cent previously.

The chain said it also benefited from the opening of further stores. It has opened 68 outlets, bringing its total to 934. Many of these were in Scotland, the south-west of England and Wales, where the supermarket giant has traditionally been under-represented.

Despite the uncertain economic outlook, the chain intends to forge ahead with its expansion plans and hopes to open between 15 and 20 supermarkets over the next 12 months and one or two convenience stores a week.

On an underlying basis, pre-tax profits jumped to 665m from 610m during the previous 12 months while "statutory" profit before tax rose 12.8 per cent to 827m.

Sainsbury's proposed a 6.3 per cent increase in its full-year dividend payout to 15.1p a share. But King warned that conditions in the market are unlikely to improve over the next 12 months.

"We expect the economic environment to remain uncertain over the coming year," he said. But he added: "We remain confident that our strategy, alongside continued strong operational performance, will enable the business to make further good progress."

The retailer also announced that it intends to rebrand its 6,500 core own-label products under a "by Sainsbury's" logo. The revamp - the biggest in the grocer's history - will be completed by January 2013.It relaunched its premium Taste the Difference range in September.

Although the annual figures removed the bad taste from its recent worse-than-expected fourth-quarter results, analysts remain cautious.

Clive Black at Shore Capital said that the firm's sales dynamic has "eased back in recent months to one of 'being in the pack' rather than sustained outperformance". Analysts at Killik said the recommended dividend increase was "disappointing" when compared to earnings growth.

Shares in Sainsbury's ended 1.3p ahead at 357.1p.