Sainsbury’s profits ahead of expectations

For the 52 weeks to March 20, total sales excluding petrol were up 6.7% and like-for-like sales were up 4.3%. Underlying operating profit is up 8.9% to £671m.

Chief executive Justin King said: “Sainsbury’s has outperformed because we continue to lead on providing healthy, fresh and tasty food with universal appeal. Like-for-like sales have grown cumulatively over five years by nearly 25 per cent. Customers recognise the progress we have made in ‘Making Sainsbury’s Great Again’ and we now serve on average over 19 million customers each week. That’s one million more than last year and nearly five million more than five years ago.”

Sainsbury’s staff will share a bonus pot of over £80m.

The grocer said its non-food business is growing at three times the rate of food, with clothing a “star performer”. It is stepping up plans for extensions, and completed 13 larger extensions in the year. It expects to add 15 to 20 extensions per year with 70 planning consents already held. It expects this will increase the proportion of the population within a 15-minute drive time doubling to around 40% by 2014.

Sainsbury’s said its online groceries business grew by just under 20%. Annual sales are now over £500m, and it reaches 90% of UK households.

Throughout the year, it launched several initiatives to promote value including expanding its Basics range, with 140 new products – now totalling 700 products. The range is showing sales up 25%.

Its Cook and Save initiative offers money-saving tips to encourage scratch cooking, and it also introduced Feed your family for a fiver, featuring Jamie Oliver.

Chairman David Tyler said: “The board is pleased with the performance of Sainsbury’s over the last year. We have delivered sales growth ahead of the market and good profit growth with underlying earnings per share up over 12 per cent.

“Our progress in achieving our strategic objectives has been strong, particularly on growing space and developing our complementary non-food offer. At the same time, our values continue to underpin everything we do, with our focus on customer service and responsible trading. As a result of this continued progress, the board is recommending a full year dividend of 14.2 pence, an increase of 7.6 per cent over the previous year. This dividend is covered 1.68 times by earnings in line with our policy for dividend cover of 1.50 to 1.75 times.”

Shore Capital analyst Clive Black said Sainsbury’s delivered “a very good performance” with pre-tax profits ahead of expectations, with the consensus at £595m.

Separately, Sainsbury’s has agreed to fund its pension requirements through a mixture of property assets and direct contributions.