Sainsbury's profits rise as it takes record market share

The grocer reported growth in its core food business, helped by own-label ranges and its Brand Match promotion. General merchandise grew faster than food and new channels such as online became increasingly popular.

Sainsbury’s also signalled that the grocery space race is slowing down and it will return to its historic space growth rate of 5% a year.

Underlying pre-tax profits climbed 7.1% to £712m in the year to March 17, when sales rose 6.8% to £24.51bn.

Sainsbury’s chief executive Justin King said: “We are succeeding by understanding what our customers want, supporting and inspiring them to ‘Live Well For Less’.

“Delivering quality and value is a compelling offer, in tune with what today‟s savvy shoppers want. Brand Match, combined with our use of coupon-at-till, has improved Sainsbury‟s price perception whilst retaining the benefits of our heritage in quality and service.

“Whilst the wider economic situation remains uncertain, we remain confident that our clear strategy, market insight and strong values will enable us to make further progress both in our core food and non-food businesses, as well as new channels and services in the year ahead.”

Sainsbury’s said that sales of its Taste the Difference range rose 8.2% and the Basics range was ahead by 6.2%. Online sales climbed by 20% to £800m and Sainsbury’s said it is the fastest-growing online food retailer.

The overall non-food market was very challenging during the year, although Sainsbury‟s continues to grow ahead of the market.

Sainsbury‟s expects the market to remain tough and forecast like-for-like sales in 2012/13 similar to those in 2011/12.

In 2012/13, Sainsbury’s expects core capital expenditure of around £1bn.