Sainsbury's reveals expectation-beating profits

Sainbury's store

Shoppers continued to pile through the check-outs at Sainsbury's in the six months to October, leading the supermarket giant to reveal expectation-beating profits for the period.
The UK's third largest grocer notched up a 3.7% jump in total sales to £11.15 billion, helping pre-tax profit climb 32.6% to £342 million.
However, despite its success, Sainsbury's reiterated warnings that lower food inflation was already slowing sales growth and it expected a more muted second-half showing.
In the 28 weeks to 3 October, sales on a like-for-like basis (excluding fuel and new store openings) rose by 5.7%. Despite the economic gloom hanging over the UK, it was Sainsbury's fifth successive year of like-for-like sales growth.
However, total sales were pegged back by lower petrol prices, which retreated following the slump in oil prices from last year's all-time high of $147 a barrel.
Sainsbury's said it saw a "strong" performance from its non-food lines, with this area of the business growing around 2.5 times the rate of food - adding that weekly transactions were up 800,000 year-on-year to over 18.5 million.
However, chief executive Justin King warns that the good times will come to an end in the second half of the current financial year.
"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," he said. "We remain confident that our universal customer appeal means we are well positioned to perform in this environment."
The latest TNS Worldpanel figures showed that Sainsbury's is growing at a faster rate than rival Tesco, at 5.6% over the 12-week period. However, Tesco is up over a four-week period, increasing its share of the grocery market for the first time in nearly two years after doubling the points accrued to its Clubcard loyalty scheme.
In its statement, Sainsbury's also confirmed that around 20,000 temporary staff would be employed to cope with the heightened customer volume around Christmas.
Chairman David Tyler had some more upbeat words for investors, as he revealed the group's interim dividend payment.
"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. Our interim dividend is 4p per share in line with our policy to pay this at 30% of the previous full year dividend."