Marcus Leroux, Retail Correspondent
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J Sainsbury hopes to double the customer base of its larger stores within five years by expanding its non-food range and opening large supermarkets in parts of the country where it has few outlets.
Justin King, chief executive, said yesterday that 20 per cent of Britons lived within 15 minutes of Sainsbury’s “extended offer”, including non-food. He said that within five years that could reach 40 per cent as the supermarket chain catches up with Tesco and Asda in extending stores to include clothing, homewares and electricals, while branching out from its southern heartland to open stores in the North of England and Scotland.
The company raised £432 million in June to accelerate its store-opening programme. Sainsbury’s said yesterday that it had increased the number of weekly transactions at its tills by 800,000 to 18.5 million.
The ambitious target came as Sainsbury’s reported pre-tax profits for the first half, up 19 per cent to £307 million, better than expected.
Sales, excluding petrol, rose 5.7 per cent, on a like-for-like basis, to £11.2 billion. In the six months to October 3, it made £342 million, including profit from property and rises in non-cash property valuations. The dividend was increased from 3.6p to 4p.
Mr King shrugged off suggestions that Sainsbury’s was now the slowest-growing of the Big Four supermarkets. He said: “We don’t need anyone else to fail for us to succeed ... we’re still growing market share.”
In a trading update in September, Mr King rejected claims by Sir Terry Leahy, chief executive of Tesco, that Tesco had overtaken Sainsbury’s in terms of sales growth. Industry data released this week suggests that the gaps are closing in the sales growth of the big supermarkets.
Sainsbury’s plans to add 50 new supermarkets by March, 2011, most of which will be in areas where it has a low market share. In London, it boasts a 27 per cent share of the grocery market, compared with only 6.6 per cent in Scotland and about 10 per cent in Lancashire.
While Tesco and Asda expanded during the 1990s, Sainsbury’s was beset with difficulties. Darren Shapland, chief financial officer, said: “After taking on stores from the Morrisons-Safeway estate and opening stores organically, we have found that Sainsbury’s can compete very well in the northern part of the country.”
Mr King said that Christmas would be “feisty” as shopkeepers strive to coax extra spending from customers, some of whom are enjoying higher disposable income, thanks to lower mortgage payments and falling energy bills, against a backdrop of lower food inflation. He said: “The money is there to be spent if we can convince customers to spend it.”
Sainsbury’s was selling more items on promotion than last year, but was still lagging behind some rivals, Mr King said. “All being well, we’re coming out of recession, we have the knowledge that VAT is coming up ... that’s all going to make for a bouncy, feisty Christmas.”
David Tyler, the new chairman, yesterday downplayed the prospect that Qatar’s sovereign wealth fund would resurrect the bid it dropped two years ago after opposition from the Sainsbury family. He said that he met QIA representatives before taking up his role as chairman last month. He believed that the Qataris regarded their 29 per cent Sainsbury’s stake as a long-term holding.
On his first appearance since his appointment, Mr Tyler said: “As you would expect, I have met some big shareholders ... including the QIA and the Sainsbury family. I have no idea what [QIA’s] long-term ambitions are, but there is no impression that it has changed in the last 12 or 18 months: and that is to be a long-term shareholder in this business.”
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