13th Nov 2013 08:18
LONDON (Alliance News) - UK supermarket J Sainsbury PLC Wednesday said its market share had reached the highest level for a decade, as it kept outperforming its main rivals with strong sales and profit growth in the first half of the financial year.
The third-biggest UK supermarket behind Tesco PLC and Wal-Mart's Asda, raised its interim dividend to 5 pence, from 4.2p, as it reported a 9.1% rise in pretax profit to GBP433 million for the 28 weeks to September 28, from GBP397 million a year earlier. Excluding items like gains or losses on its property portfolio and other financial items, the figure rose 7% to GBP400 million, from GBP374 million.
Total revenue rose to GBP12.68 billion, from GBP12.16 billion, while like-for-like sales rose 1.4%, the 35th consecutive quarterly increase according to the company. It said its market share of 16.8% for the year to October 13 is its highest for 10 years.
Executives were keen to stress, however, that the consumer environment remains very tough with customers unwilling to splash out on items. Chief Financial Officer John Rogers said in an interview that the situation is likely to continue through the key Christmas trading period, although Sainsbury expects to make further market share gains.
"Whilst customers' budgets remain tight and any recovery in the economy may take time to take effect, our consistent strategy and strong values-driven culture mean we are well placed to continue to deliver for customers, colleagues and shareholders," Chief Executive Justin King said in the earnings statement.
Sainsbury's has seen a revival in its fortunes over the past couple of years after many years of losing market share to its bigger rivals. It cut costs, revamped its own-brand food ranges, and kept its non-food offering focused whereas Tesco over-expanded offerings like electrical items which were badly hit by the economic downturn.
Morrison, the fourth-biggest supermarket in the UK, last week reported lower like-for-like sales for its third-quarter. It is lagging because it has a much smaller presence in growing areas like online and convenience stores. Tesco also reported a decline in like-for-like sales in its most recent reporting period.
Rogers said Sainsbury would continue improving online and convenience store operations as it expects those to continue to be a key growth driver.
The supermarket group took a writedown of GBP92 million for land sites on which it has decided it won't now build supermarkets. Rogers said the property writedown won't be repeated.
Sainsbury shares were up 0.9% at 402.3 pence early Wednesday, one of the biggest rises on the FTSE 100.
By Steve McGrath; [email protected]; @SteveMcGrath1
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