The profits of Sainsbury's have overtaken its rival Morrisons as a rise in half-year sales and profits confirmed the retailer’s position as the best performing major supermarket chain in the UK.
Pre-tax profits, before one-off costs, rose 7% to £400 million in the six months to the end of September. The company said that underlying sales growth, plus £55 million in cost cuts and the addition of more convenience stores, which are more profitable than large outlets, all helped boost the bottom line. Total sales rose 4.4% to nearly £14 billion .
Sainsbury trails Tesco by annual sales and is battling Wal-Mart Stores Inc's Asda to be Britain's No. 2 grocer, but has enjoyed 35 straight quarters of underlying sales growth, boosting its UK market share to a decade-high 16.8%.
Chief executive Justin King (pictured) said on Wednesday the group was well placed for more growth, even though he cautioned that any recovery in Britain's economy may take time to take effect as consumers' budgets are being stretched by below-inflation wage rises.
The firm is outperforming rivals with a strategy focused on own-brand products and investing in fast-growing online and local convenience store channels.
Sainsbury's own-brand sales are growing at more than twice the rate of branded goods, while online and convenience stores are the two fastest-growing areas in the grocery sector.
Their online grocery sales rose by 15% in the half, while convenience store sales increased over 20%. Sainsbury's yesterday wrote off plans for 15 new supermarkets, incurring a cost of £92 million.
