Sainsbury looks for growth after dismal results
SUPERMARKET group Sainsbury yesterday disclosed new growth plans, following another set of dismal financial results confirming the group's loss of market leadership to its arch rival, Tesco.
First half profits fell 13.8 per cent to £393 million sterling in the 28 weeks to September 21st and the interim dividend is being increased by only 2.9 per cent to 3.5p.
Although turnover increased 6.4 per cent to £7.5 billion, like for like sales excluding new selling space only kept pace with inflation at 3 per cent.
The weak interim figures follow lower annual profits for 1995-96 when the group was outperformed by Tesco putting on profits on higher sales growth and gaining market share into the bargain.
Now, the chairman, Mr David Sainsbury, says the group is "driving ahead with a major programme of marketing and operational changes to improve substantially our offer to customers. We are gaining market share and expect sales growth to increase as these changes take effect," he said.
Senior management has been changed new emphasis is being placed on product quality and choice - particularly in fresh foods - and customer loyalty is being enhanced through the new Reward Card providing discounts for regular shoppers.
Introduced last June, the Reward Card is now being used by around seven million customers, accounting for 70 per cent of sales. The card will be available for customers of the group's first stores in Ireland, due to open on December 3rd in Ballymena and Belfast, and Sainsbury's new banking services will also be available to customers in January.
Shares in Sainsbury rose after the results. "The share price rise is a triumph of hope over statistics," said one sector analyst.
After the results, several analysts cut forecasts for the current full year to between £710 million and £725 million, a level some analysts were already predicting, market sources said.
But shares closed up 8.5p to 363.5p, in a market which was generally easier.