| Make foodmate.com your Homepage | Wap | Archiver
Advanced Top
Search Promotion
Search Promotion
Post New Products
Post New Products
Business Center
Business Center
 
Current Position:Home » News » Marketing & Retail » Retail » Topic

Sainsbury profit growth driven by own-label food

Zoom in font  Zoom out font Published: 2012-11-15  Origin: foodmanufacture.co.uk  Authour: Mike Stones  Views: 30
Core Tip: Growth in own-label food has helped Sainsbury achieve a 2.5% rise in profits to £405M in the six months to September 29.
Growth in own-label food has helped Sainsbury achieve a 2.5% rise in profits to £405M in the six months to September 29.
Justin King
Underlying profit before tax climbed by 5.4% to reach £373M.

The retailer’s ceo Justin King told BBC Radio 4’sToday programme: “In the past six months in all of our stores – including supermarkets – we’ve seen strong growth in our own-label: our Sainsbury’s range but also Taste the difference. And there’s a simple reason for that – it’s the easiest way for customers to save money without compromising on quality.”

King claimed that growth in our own-label sales were “quite a bit better than that of our competitors”.

“The growth in the market today is coming mostly from convenience stores as people shop around more often and from online as people take the convenience of doing a big part of their weekly shop that way. So we have been building those businesses for around 10 years now and that’s partly why our business is doing so well.”

Online sales

Online sales rose by more than 20%, with grocery orders regularly exceeding 165,000 a week, said the retailer.

Also, the convenience business was expanding by one to two stores each week and also experienced nearly 20% year-on-year growth.

Sainsbury claimed its share of the UK grocery market rose to 16.7% − the highest for nearly a decade.

It also posted sales, including VAT and fuel, up by 4% to £13.36bn.

King said the market remained challenging. “If you look at customer data, it will tell you that throughout the past year, they’ve remained tightly in control of the purse strings and quite pessimistic and that remains the case. What we have to do is to help them with that weekly challenge: the weekly grocery shop.”

The retailer said it was 85% of the way through the re-launch of its core by Sainsbury range. That would result in 6,500 new or improved products introduced by April 2013.

Basic earnings per share

David Tyler, chairman, said in a statement: “Sainsbury has made a strong start to the year, delivering continued outperformance in what has remained a challenging market.
We have grown our underlying basic earnings per share to 15.2p, return on capital employed remains unchanged at 10.9% and our interim dividend is 4.8p per share, up by 6.7%.”

Meanwhile, City analyst Shore Capital described Sainsbury’s results as“very solid” and “a little above its expectations”.

Shore’s Clive Black and Darren Shirley said: “Looking into 2012/13, we believe there is scope for Sainsbury to modestly pare back its capital investment programme, which will further support the group’s cash flow credentials. We forecast net debt/EBITDA [earnings before interest, tax, depreciation and amortisation] at the year end at a comfortable 1.6x.”

But if market leader Tesco began to regain share from its margin investment programme, then Sainsbury remains “the most vulnerable given the scale of trading overlap between the two groups”, they added.

Shore repeated its ‘hold’ advice on Sainsbury shares.

Sainsbury results – at a glance

• Total sales (inc VAT, inc. fuel) up 4% to £13,365M

• Total sales (inc VAT, excl. fuel) up 4.1%

• Like-for-like sales (inc VAT, excl. fuel) up 1.7%

• Underlying profit before tax up 5.4% to £373M

• Underlying basic earnings per share up 9.4% to 15.2p

• Return on capital employed was 10.9% (the same as in 2011/12)

• Interim dividend of 4.8p per share, up 6.7%.

 
 
[ News search ]  [ ]  [ Notify friends ]  [ Print ]  [ Close ]

 
 
0 in all [view all]  Related Comments

 
Hot Graphics
Hot News
Hot Topics
 
 
Powered by Global FoodMate
Message Center(0)