Sainsbury's profits rise to £380 million

Source: Stock Market Digital

Date :21/05/2007 15:30:29

Supermarket chain Sainsbury's has seen its full-year profits surge to £380 million as it cut prices to lure customers from rivals.

Underlying pre-tax profit was £380 million in the 52 weeks to 24 March, from £267 million in the same period a year earlier.

Sales climbed £6.9 million to £18.52 billion from £17.32 billion.

Strong growth means that the company’s staff will share a record £56 million bonus pot.

Sainsbury's, which has been a takeover target for a private equity consortium in recent months, also said it had narrowed its pensions deficit to £55 million.

Chairman Philip Hampton said: "This strong performance was delivered despite potential takeover speculation in the last quarter of the year.

"The board did not receive a formal bid approach capable of being put to shareholders."

Restructuring

Sainsbury's is facing calls from some investors who want to split up its supermarket and real estate business.

They believe that as much as £4 billion should be returned to shareholders by the sale of real estate.

Sainsbury's said that the value of its property holdings was £8.6 billion, 65 percent more than earlier estimates, and underlined its unwillingness to cave in to pressure to break up its business.

"Property has always been at the heart of our business and is closely aligned to our successful operation," Mr Hampton said.

"Our estate still has considerable development potential, which we believe will maximise both operational and freehold property value.

"As we move from recovery to growth, we believe it is right to retain ownership of our properties."

Sainsbury's launched a restructuring programme in 2004, which is due to come to an end in October this year.

"We believe now is the right time to look to the next stage of our recovery and to expand the business to drive growth for the longer term," said chief executive Justin King.

Mr King has now overseen nine quarters of consecutive sales growth.

Sainsbury's said that it planned to increase sales to £3.5 billion by the end of 2010 and would look to increase its amount of retail space by 10 percent and roll out its online home delivery service to 200 stores nationwide.

It is likely that the company will look to increase its diversification into non-food areas.

May 16 2007