Supermarket chain Sainsbury's has reported a massive 62% dip in annual profits, which shrunk to £254 million. However, the group is predicting smoother times ahead as sales showed 1.7 percent lift during the final quarter.
Sainsbury's is in the second year of its £400 million, three year turnaround programme. "While it is pleasing to be able to report that our sales performance improved towards the end of the year, these are early days and there is much to be done to deliver our plans in a tough and competitive UK retail market," the groups’ chairman Philip Hampton said.
The losses that were reported last November were the first in the group's 135-year history. This shook up the hierarchy and since then the group has been constantly striving to improve its supply chain. Currently, Sainsbury's ranks third in the list of supermarket chains behind Tesco and Asda.
Sainsbury's pre-tax profits were a paltry £15m for the year ending March 26 as compared with £610m in the previous year. However, chief executive Justin King appeared confident that the group would weather this storm, "I'm a pretty confident sort of guy, as you know. As every day goes by, it's bound to give you more confidence. We have made good progress and can see early signs of improvement in our customer offer and sales,” he said.
Commenting on the 1.7 percent sales lift, he said, "You shouldn't assume that. There's a strong competitive market. Some of our competitors can buy business and that overall trend will continue. Tesco offered 30pc off all their Australian wine range. That's below cost. We hope to have some great quarters but there will be some not so good quarters. We are forecasting market-matching growth in the second half."
Mr. King attributes this rise to the fact that Sainsbury's is attracting customers away from Morrison's and Asda, "Fresh food is not as good at Morrisons. But I'm certainly not fussy about where we're taking sales from," he said. Analysts feel that this shift towards Sainsbury’s is because of problems being faced by Morrisons, "Sainsbury's have been lucky. There's no way that Justin could have envisaged the depth of Morrisons' problems or the slowdown at Asda," one analyst said.
Posted
on : Fri, 20 May 2005 16:20 GMT | Business News
By : Salim Patel
|
