Sainsbury's has struggled to lift sales with the announcement of its half-year results but Sir Peter Davis is confident that the group can now look with hope to the future.
Underlying profits rose by seven per cent to £366 million, slightly ahead of city forecasts of between £356m and £365m. While revenues edged up to £9.84 billion from £9.74 billion and its dividend rose by 2.5 per cent to 4.33p.
Davis said that the results have been achieved during the peak third year of the group's ambitious transformation programme, which has been a period of immense change. He said: “By the end of this year we will have completed the majority of our systems changes, substantially modernised our supply chain and upgraded 80 per cent of our store portfolio.”
The group has been simplifying its organisational structure and has reduced its headcount at its Holborn business centre by 20 per cent. Davis added: “We are not satisfied with the impact of these activities on our sales performance but the marketplace has been moving fast and we are looking to restore long-term growth.”
Davis believes that by summer 2004 the achievements of the business transformation programme will provide a platform for refocusing on sales growth. He said: “We will have opportunities through extending our products and our services to serve customers better. We will seek to buy and build stores where we trade most successfully and the first of our additional 100 Sainsbury's Locals in conjunction with Shell opens in Battersea this week. Seven more will be trading by Christmas and a further eight by March 2004.”
He said on Radio Five Live that Sainsbury's has outperformed the Financial Times Stock Exchange by 55 per cent during his time as ceo, and that the media in general should not be so "obsessed with sales figures", adding that Sainsbury's shareholders and customers did not view results in such a black and white manner.
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