Sainsbury earnings fall

May 30, 2001
Web posted at: 0854 GMT

LONDON (CNN) -- The UK's second-largest supermarket chain Sainsbury posted a 5 percent fall in earnings as it continued its overhaul to regain market share. 

Sainsbury said full-year profit before taxes and one-time items fell to £549 million ($778 million) from £580 million the previous year, at the lower end of analyst expectations.

Annual sales increased by about 6 percent to £18.4 billion from £17.4 billion. But net profits, including one-time items, fell 25 percent to £262 million, or 13.7 pence per share, from £349 million, or 18.2 pence per share a year ago, the company said.

Sainsbury, which was previously the country's top grocer, was overtaken in the mid-1990s by Tesco (TSCO) and the UK's two other leading supermarkets, Safeway (SFW) and Wal-Mart-owned Asda, have continued to bite into Sainsbury's market share.

Chief Executive Peter Davis, who has been at the helm since January last year, has overhauled strategy to turn profits around by selling the Homebase do-it-yourself stores and undertaking a programme of shop modernization.

Davis said the latest earnings showed the company was moving forward, saying that second-half pretax profit before one-time items was 16 percent up on the same six months a year ago.

"It is encouraging to see the turnaround in customer numbers and the increase in like-for-like sales since Christmas, which continue into the current financial year,"  said Davis.

Davis said the company's expansion into the U.S., where it owns the Shaw's chain of 185 supermarkets and acquired Grand Union Stores, was progressing well. U.S. sales grew by over 5 percent to more than $4 billion.

Sainsbury (SBRY) said net debt fell to £859 million from £1.26 billion, mainly reflecting the cash generated from the sale of Homebase to Schroder Ventures.

UK retail stocks sale on – Jan. 11, 2001

Sainsbury

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