Sainsbury's this morning reported a profit slide, but said that the recovery signs are becoming stronger.
As expected by the City, pre-tax profits fell to £15 million for the year to March - a massive downturn from the £610m unveiled 12 months previously.
However, total sales rose 5.5 per cent to £1.6bn and the profit wipeout is generally seen as part of the rebuilding process.
Sainsbury’s has spent the last year restructuring its team, with the primary objective of improving stock availability and addressing serious IT and delivery problems which have played havoc with its supply chain efficiency.
The group’s three-year recovery plan - Make Sainsbury's Great Again - has set Sainsbury’s back to the tune of a total of £510m since its October launch. It is expected to cost a further £50m in the next 12-month financial period.
Like-for-like sales have improved under the plan. Despite falling 0.4 per cent in the year to March, they increased 1.7 per cent in the last quarter.
Underlying profits for the year were £254m compared to £675m last year.
Chief executive Justin King said: "We have made good progress and can see early signs of improvement in our customer offer and sales.
"We are on track but still in the very early stages of a long-term recovery programme."
Sainsbury’s yesterday launched a drive to recruit 10,000 shop workers aged 50 and over as part of its drive to help give customers a "quality, hassle-free festive shopping experience”.
They are being hired predominantly for the busy Christmas period.
King told BBC Radio 4's Today programme that the retail slide hitting much of the UK would not affect supermarkets.
"Market monitoring shows that our growth continues month on month," he said. "Food supermarkets tend to be less affected by the ups and downs of the retail market than other retailers on the High Street."
Recent data from market analysts TNS showed Sainsbury’s market share had stabilised at close to 16 per cent, leaving the firm in third place behind Tesco and just behind Asda.
In an effort to reach its target of improving sales by £2.5bn by 2007/8 the group says it plans to invest £400m over the next three years on improving pricing, product quality, and customer service.
The group aims to cut costs by £100m over the coming year - tackling stock loss costs, IT systems and central costs.
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