Sainsbury's 'Basics' Boost Annual Profits
Sainsbury's has reported a better than expected rise in annual profits saying its market share has increased to its highest in a decade.
The UK's third largest supermarket chain, with more than 1,000 stores, revealed underlying profits of £712m for the year to March 17, an increase of 7.1% and well ahead of forecasts of about 5%.
The group said overall sales excluding VAT rose 5.6% to £22.3bn, taking its market share to the highest level for nearly a decade at 16.6%.
The results come at the expense of Tesco, the UK's largest retailer, which issued a profits warning in January and has seen its market share slide.
Sainsbury's attributed its good results to its Brand Match price scheme, which guarantees to match Asda and Tesco on 14,000 branded goods.
Retailing analyst Nick Bubb told Sky News that Sainsbury's approach to marketing and promotions was "pulling in more customers" than rivals.
With Government austerity measures, worries about job security and muted wage growth, cash-strapped shoppers have also been drawn to its 'basics' range.
However, the chain, which opened 73 local convenience stores last year as part of 1.4 million square foot of new space, said it will slow its rate of store expansion from just over 7% to about 5% in the current financial year.
Sainsbury's said its non-food business, including clothing, was growing faster than its food business.
Chief executive Justin King told Sky News the supermarket was operating in a tough consumer environment.
He said: "We have grown our sales and profits by doing a great job for our customers but the overall economic backdrop has made that particularly challenging in the last 12 months."
Sainsbury's says it is well placed to benefit from the a roster of events this summer - the Queen's diamond jubilee, the Euro 2012 football championships and the London Olympics and the Paralympics.
Data last month showed Britain is back in recession, prompting fears of a fresh decline in consumer confidence, while high oil prices have raised doubts about whether inflation will continue to fall from last year's highs.
A separate survey published shows UK retailers posted their biggest sales fall in more than a year last month.