Sainsbury’s has reported strong sales in returning an 18.5 per cent rise in underlying profit for the first six months of the year, but struck a note of caution over its performance going forward.
The supermarket’s pre-tax profit in the six months to October 3 totalled £342 million, up 32.6 per cent from £258m a year ago.
Its like-for-like sales, excluding fuel and the impact of new store openings, rose 5.7 per cent, up on 3.9 per cent a year earlier.
But the retailer warned market growth was expected to fall back in a challenging environment, while easing food inflation may slow sales growth.
Chairman David Tyler said: “We have delivered a strong performance during the first half of the year. Sainsbury’s is responding well to the current economic environment and it has significant opportunity for continued long-term growth.”
Sainsbury’s chief executive Justin King said: “Sainsbury’s has continued to develop its offer to provide customers with a wide product range to suit all needs and budgets. We now have over 18.5 million weekly customer transactions, 800,000 more than this time last year… Tight control on operating costs is enabling further investment in the customer offer and, together with our good sales performance, has delivered further strong profit growth.
“Our strategy is now well established and has enabled us to compete successfully through challenging economic conditions. We have continued to grow market share, extended our reach through online operations and have stepped up the expansion of our convenience store network. The time is right to accelerate our growth plans and in June we raised £432m to fund faster growth in our store estate and support our circa £2 billion capital expenditure programme in the two years to 2011. We’re on track to grow gross space 15 per cent over this time and we see potential for growth for many years to come.
“As we enter the second half we expect the economic environment to remain challenging and market growth to slow due to reduced food price inflation. We remain confident that our universal customer appeal means we are well positioned to perform in this environment. In addition, the acceleration of our strategy will deliver sustained long-term growth and value to shareholders.”
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