Green retailing boosts Sainsbury’s profits

SAINSBURY'S turn-around strategy is continuing to lift the
supermarket's fortunes.

The retailer, which launched its Making Sainsbury's Great
Again campaign in 2004, put in yet another strong performance for
the 28 weeks to October 6.

Pre-tax profit rose from £232m compared to £194m for
the previous financial half-year, with like-for-like sales growth,
excluding fuel, growing to 4%.

Sales have grown by £2.3bn, which puts the supermarket
ahead of plans to reach £2.5bn sales growth by March 2008.

Core ranges such as newspapers, magazines and stationery
performed strongly and the company continues to grow market share
in areas such as computer games and books.

A new range of kitchenware has been launched during the first
half and saw the biggest increase in market share within the
company's non-food ranges.

TU, Sainsbury's own brand clothing range, continues to be a
star performer and the company is now the eleventh largest UK
clothing retailer by volume and is on track to achieve sales in
excess of £300m this year.

The range was introduced into a further 13 stores during the
first half and is now in 262 stores with a target to double the
space dedicated to TU in the next three years.

The promotion of “green” credentials, and the launch
of campaigns such as Different Values have earned the supermarket a
number of accolades including being highly rated in the National
Consumer Council audit of retailers' environmental
performance.

It was also voted Supermarket of the Year for the second year
running in the Retail Industry Awards.

Philip Hampton, chairman of Sainsburys, said:

“We have delivered another strong performance during the
first half of the year and have increased our interim dividend by
25%.

“These results demonstrate our continued ability to grow
the business. Sainsbury's has great potential under the
leadership of its strong management team and the company remains
committed to completing its recovery plan and continuing to deliver
improved performance.”

Justin King, chief executive, said everyone at Sainsbury's
has been focusing on serving customers better despite takeover
talks – the latest of which were confirmed as off last week.

“We now have 16.5 million customers each week,” he
said.

“Our two-year like-for-like growth is around 10% and strong
operational gearing provides a firm base for future
growth.”

Mr King also said he was pleased with Sainsbury's strong
environmental performance.

The retailer is the first online grocery store to operate an
electric zero emission vehicle, and has said that by mid-2008, 20%
of orders will be delivered by the eco-friendly fleet.

Sales of T-shirts made with Fairtrade cotton under
Sainsbury's own TU brand are also set to increase with the
company's order of the cotton set to increase from 40 tonnes to
420 tonnes.

Nearly two million t-shirts will have moved to Fairtrade cotton
by January 2008.

The company is the only major supermarket to be given an
'A' by Greenpeace for its environmentally responsible
timber and paper sourcing having converted its entire range of
own-brand tissue, toilet paper and kitchen towel to FSC or recycled
paper.

Sainsbury's also announced a new property joint venture with
Land Securities called The Harvest Partnership, which will own the
freeholds of three properties to a market value of
£113.4m.

As well as extensions to existing Sainsbury's stores,
development may include housing.

In a separate transaction, Sainsbury's has exchanged
contracts to purchase two existing stores from Land Securities in
Winchester and Wednesfield.

But it's expansion plans don't stop there. Over the next
three years, the company is targeting the completion of 75
extensions and 190 refurbishments with the large majority
undertaken in its freehold and long leasehold estate.

Sainsbury's plans to open 30 new supermarkets and 100
convenience stores with space split equally across food and
non-food ranges.

In October Sainsbury's acquired 15 stores from Kwiksave. At
an average size of 6,000sq ft, ten stores will be opened as small
supermarkets and five will be branded as Sainsbury's Locals.
The first four stores opened at the start of November and all will
be trading for Christmas 2007.