Sainsbury's building on its Local connections

The growing battle for the convenience store shopper stepped up a gear yesterday as Sainsbury's said its Local outlets are now earning more than £1 billion a year.

Unveiling a 36 per cent rise in group pre-tax profits to 466 million, chief executive Justin King said the trading momentum of both the main stores and Sainsbury Local outlets gave the group confidence to ramp up its opening plans.

He said the group was on target to open 1.5 million sq ft of new stores and extensions over the next 12 months.

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Sainsbury's opened 13 convenience stores in the six months to 2 October, but planned to nearly quadruple that to 50 in the second trading half. Darren Shapland, the company's development director, said: "It (convenience store expansion] could be a very rich seam for many years to come."

Highlighting Sainsbury's aggressive approach on store expansion generally, Shapland said in the past month the group had opened its biggest outlets in Scotland, England and Wales - at Darnley, near Glasgow, Crayford and Newport respectively.

The group has more than 40 stores north of the Border, made up of 30 supermarkets and 13 convenience stores.

Group like-for-like grew 2 per cent and the dividend is lifted by 7.5 per cent to 4.3p.

Profits at Edinburgh-based Sainsbury's Bank, the group's joint venture with Bank of Scotland, doubled to 6m as bad debts reduced and the number of active accounts rose 5 per cent to 1.4m.

King said the food retailer added one million customers to take the figure to 20 million. As this covered the whole social waterfront, he said it was "simplistic" for some in the industry to speculate that the group's more upmarket food offering would be more resilient to job cuts triggered by the public-sector austerity programme.

He said the group's top-end "Taste the Difference" range had seen a mid-teens percentage rise in sales since its September relaunch, fronted by celebrity chef Jamie Oliver.

"People are staying in rather than going out to eat," he said.