Celebration for Britain’s third largest supermarket chain, J. Sainsbury has begun and is revealed from the fact that the underlying sales rose for the second quarter in a row for the first time in two years.
This leading retailer announced a three-year turnaround plan, which aimed at reviving market share lost to rivals like Asda and Tesco. Besides, the turnaround plan also focuses in enhancing the distribution network by pumping an investment of $5.5 billion with an objective to add warehouses and set up an effective computer system.
The company declared sales increase to the extent of 1.3 % excluding petrol and 1.9% including petrol in the first quarter. The figures for total sales, which encompassed new openings, soared to 5.7%.
Great news for the shareholders, growth though slightly less than what was witnessed in the final quarter of the last year, is surely balancing with the expectations, which also depicts sustained growth in the forthcoming quarters.
Justin King, Chief Executive of the supermarket chain said, “"We are implementing the plans outlined in October 2004 and our progress is encouraging,” who also slashed prices on almost 7000 items since he joined Sainsbury in the year 2004.
Moreover the Chief being encouraged by the trading performance states "Given the more difficult and competitive grocery retail market over the past three months, like-for-like sales of 1.3 per cent represents continued progress,” and "We have seen further progress in restoring the appeal of our brand and customers continue to react positively to the changes."
The reflection of growth is also seen in the stock market as the stock gained 20 pct since King sketched a three- year recovery plan last year which aimed to outperform UK food retailers by around nine pct.
An analyst, Rhys Williams said, “This is slightly below Q4's performance. However, taking into consideration the slowdown of the market, we believe that this is a very creditable performance,” which surfaces the underlying fact that annual retails sales has been a slowdown since six years emerging from realities like decline in house price inflation, decreased consumer spending and fluctuating interest rates.
Nearing to Asda, which holds a 16% share of the sector, Sainsbury has ambitious plan of total sales of £2.5 bn by the year 2007 – 08.
What is significant as stated by Mr. King is that “Customers are increasingly seeing the benefit of our better availability as we improve the in-store experience," and hence brand loyalty is becoming an integral factor with the consumers who now refrains from switching stores.
The Chief Executive is putting things into action as he further added that 300 extra workers have been entrusted with the responsibility to stack shelves and with this the customers will observe “significant” improvement in accessibility.
The environmental group Friends of the Earth called for investigation to delve into Tesco's "monopoly" of the market.
"MPs must act now to curb the growing market power of supermarkets and ensure that Britain's booming supermarket industry does not kill off farmers, consumer choice and the traditional British high street," said Vicki Hird, the Friends of the Earth supermarket campaigner.
Tesco said it had "only grown because more customers have chosen to shop with us, and they will only continue to do that if we do a good job for them".
Chief Executive was point blank and refused that the company had not been approached by Carrefour and clearly indicated ‘if we had anything to say, we'd say it to the market.’
Posted
on : Fri, 24 Jun 2005 09:15 GMT | Business News
By : Rob Davis
|
