Sainsbury betters forecasts, posts 5.3% growth in quarterly sales |
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Wed, 29 Mar 2006 12:25
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LONDON: Britain's third largest supermarket chain J Sainsbury Plc. bettered market forecasts logging growth for the fifth successive quarter, making it clear that chief executive Justin King's strategy is working.
The company said in a statement that its same-store sales, excluding fuel, grew 5.3 per cent in the 12 weeks ended 25 March, compared with the corresponding quarter last year. Market expectations were at a moderate 3.8 per cent. Total sales, including new space but excluding fuel, rose 6.5 per cent.
The growth marginally surpasses 5.2 per cent achieved during the Christmas quarter, which is traditionally a strong trading period for the firm. It is also comparable in the background of a grocery price deflation of 2.2 per cent in the quarter.
King said he is comfortable with the market forecast of pretax profit for the year at 260 million pounds. The CEO, who started the firm's turnaround plan in October 2004 targeting a growth of 2.5 billion pounds in sales in three years, after its market share dwindled and it was pushed to the third place from a pre-eminent No 1 position, said its stores had attracted an additional one million customers per week over the past six months.
He had cut prices of some 8,000 products and he said customers are spending more money, as "we are competitive on price".
According to the latest data, Sainsbury has a market share of 16.2 per cent, while Wal-Mart's Asda has a marginally higher 16.6 per cent. Analysts feel it is a matter of time that Sainsbury covers this gap. Market leader Tesco has a 30.4 per cent share.
Sainsbury's shares rose 4.5 pence, or 1.4 per cent to 331.5 pence valuing the business at 5.6 billion pounds.
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Sainsbury's on turnaround blitz 