J Sainsbury, the UK supermarket group, appeared to shake-off some of the gloom gripping the retail sector today after unveiling an 11 per cent increase in pre-tax profits during the first six months of the year.

Profits over the six months to October 4 rose to £258 million on a 3.9 per cent rise in like-for-like sales while total trading, including revenue from new stores opened during the period, increased by 7.6 per cent to £10.8 billion.

The rise in underlying sales at Sainsbury's means the retailer has now delivered 15 quarters of consecutive underlying sales growth.

Justin King, chief executive of Sainsbury's, described the environment for shoppers as "particularly challenging" and said buying patterns have dramatically changed in recent months.

He said the introduction of ranges such as 'Basics' at Sainsbury's, meaning that shoppers could spend less if necessary, had given it an edge over the competition.

"Getting the best value for money is even more important to consumers when household budgets are stretched," he said.

Mr King said Sainsbury's would be speeding up its expansion programme for its convenience stores, opening 50 new shops over the coming year and then 100 a year from then on.

But he said that the retailer would commit no additional capital to the programme on top of its planned £800 million capital expenditure for this year.

"We're raising the bar to ensure we spend that money more wisely than originally planned," he said.

The beginnings of an economic recession have increased the stakes for the UK's retailers. Sainsbury's is battling with Tesco, Britain's largest grocery chain with Asda, owned by America's Wal-Mart, in second position.

However, unlike some of its rivals, Mr King indicated that trading at Sainsbury's had held up well during October and he welcomed the Bank of England's 1.5 per cent interest rate cut earlier this month.

He said the retailer had been having "challenging conversations" with its suppliers about pricing, particulary of own-brand goods, but he stressed that relations were good and denied the retailer was putting the squeeze on any companies.

Sainsbury's is on course to increase its floor space by 4 per cent this year and is working on its joint venture with British Land to explore ways of developing existing stores, Mr King said.

Sainsbury increased the first-half dividend from 3p to 3.6p.

Shares rose 1.38 per cent to 276p, having closed last night at 272.25p. The group is valued at almost £4.8 billion. Shares have fallen sharply this year on worries about the impact of the slowing economy.

Freddie George at Seymour Pierce said he thought the Sainsbury's share price was about right.

"We are concerned that the food retail market is becoming more competitive and the level of promotional activity is increasing; consumers are continuing to trade down, a trend that is likely to accelerate in Sainsbury’s southern heartlands; it is becoming more difficult in a static market to gain market shares and that returns on the heavy capital expenditure programme are starting to contract," he said.

"Finally, we are also concerned that the gains from the non-food opportunity, in particular the development of apparel, are taking longer to materialise than planned."

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