Sainsbury's this morning (14 November) reported an increase in half-year profits, a period in which the UK retailer said it had "outperformed" its competitors.
Pre-tax profits were up 2.5% to GBP405m in the 28 weeks to 29 September. Revenue grew 4% to GBP12.16bn, excluding VAT and including fuel.
Sainsbury's said its like-for-like sales, excluding sales at the pumps but including VAT, were up 1.7%.
The retailer said its share of the UK grocery market had reached 16.7%, its highest level for "nearly a decade".
"We continue to succeed by remaining focused on delivering quality products, best-in-class service and value for our customers, without compromise," chief executive Justin King said. The Sainsbury's chief said the retailer's Brand Match price comparison scheme, its Nectar loyalty programme and its practice of offering money-off coupons at till "reinforce our price competiveness".
Shares in Sainsbury's were down 1.58% at 341.7p at 08:41 GMT. The retailer's shares are up over 12% in the last 12 months, partly driven by speculation the Qatari Investment Authority, its largest shareholder, could again consider bidding for the business.
Click here for a flavour of how retail analysts view Sainsbury's H1 results, read chief executive Justin King touting the retailer's own-label lines here and and, on our blog pages, chairman David Tyler insists the company wants "good long-term relationships" with branded suppliers.
Good sales and profit performance; outperforming the market
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Financial summary
Total sales (inc VAT, inc fuel) up 4.0 per cent to £13,365 million (2011/12: £12,848 million) Total sales (inc VAT, ex fuel) up 4.1 per cent Like-for-like sales (inc VAT, ex fuel) up 1.7 per cent Underlying profit before tax(1) up 5.4 per cent to £373 million (2011/12: £354 million) Underlying basic earnings per share(2) up 9.4 per cent to 15.2 pence (2011/12: 13.9 pence) Return on capital employed(3) of 10.9 per cent (2011/12: 10.9 per cent) Interim dividend of 4.8 pence per share, up 6.7 per cent (2011/12: 4.5 pence per share)
Statutory
Revenue (ex VAT, inc fuel) up 4.0 per cent to £12,160 million (2011/12: £11,693 million) Profit before tax up 2.5 per cent to £405 million (2011/12: £395 million) Basic earnings per share up 4.9 per cent to 17.0 pence (2011/12: 16.2 pence)
Operating highlights
Outperformed the market, increasing market share to 16.7 per cent(4), the highest for nearly a decade, completing 31 consecutive quarters of like-for-like sales growth Nearly 250 million Brand Match coupons printed since its launch a year ago, with 'Cheaper Here Today' coupons issued over 50 per cent of the time Celebrated ten year partnership with Nectar, a continuing source of customer insight and loyalty Operational cost savings of around £60 million, on track for around £100 million for the full-year Underlying operating margin unchanged (up 1 basis point at constant fuel prices) Five awards at the Retail Industry Awards 2012 including Supermarket of the Year for the fifth time in seven years and Convenience Chain of the Year for the third year in a row World sector leader for food retailers for the sixth consecutive year in the Dow Jones Sustainability Index
Strategy highlights
Great food: Continued investment and growth in own-brand, with penetration increasing at a faster rate than any other major supermarket. We are 85 per cent of the way through the re-launch of our core by Sainsbury's range which will see 6,500 new or improved products introduced by April 2013 Compelling general merchandise and clothing: Goes from strength to strength, currently growing three times faster than our food business and gaining market share Complementary channels and services: Online continues to perform strongly, growing at over 20 per cent, with grocery orders regularly exceeding 165,000 a week. Our convenience business is expanding by one to two stores each week and is enjoying almost 20 per cent year-on-year growth. Sainsbury's Bank continues to make strong progress, with our share of joint venture post-tax profit up from £7 million to £12 million Developing new business: Announced I2C, a joint venture company with Aimia, owners of Nectar. Launched our MP3 music download service; acquired a majority stake in Anobii e-book platform; announced a video on demand service powered by Rovi Growing space and creating property value: During the half-year we opened 351,000 sq ft of space, comprising five supermarkets, 49 convenience stores and three extensions. Property profits from sale and leaseback activity were £48 million
David Tyler, Chairman, said: "Sainsbury's has made a strong start to the year, delivering continued outperformance in what has remained a challenging market. We have grown our underlying basic earnings per share to 15.2 pence, return on capital employed remains unchanged at 10.9 per cent and our interim dividend is 4.8 pence per share, up 6.7 per cent."
Justin King, Chief Executive said: "Our share of the grocery market is the highest for almost a decade at 16.7 per cent, with 31 consecutive quarters of like-for-like sales growth. We continue to succeed by remaining focused on delivering quality products, best-in-class service and value for our customers, without compromise. Brand Match, Nectar and our highly targeted coupon-at-till all reinforce our price competiveness.
"Whilst the wider economic situation remains challenging, we are well positioned to help our customers Live Well For Less. Our long-standing consistent strategy, combined with our customer insight and strong value-driven culture, will continue to deliver for customers, colleagues and shareholders."
Notes to editors
Underlying profit before tax: Profit before tax before any profit or loss on the disposal of properties, investment property fair value movements, financing fair value movements, IAS 19 pension financing element and one-off items that are material and infrequent in nature. Underlying basic earnings per share: Underlying profit, net of attributable taxation, divided by the weighted average number of ordinary shares in issue during the period, excluding those held by the ESOP trusts, which are treated as cancelled. Return on capital employed: Underlying profit before interest and tax, divided by the average of opening and closing capital employed (net assets before net debt). Sainsbury's market share grew to 16.7 per cent from 16.6 per cent (source: Kantar for the 52 weeks ended 30 September 2012). Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. They appear in a number of places throughout this announcement and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. Sainsbury's will report its 2012/13 Third Quarter Trading Statement at 07:00 (GMT) on 9 January 2013.
