Sainsbury's reports rise in profits must visit

UK supermarket chain Sainsbury's has reported a 16.3% rise in annual pre-tax profit to £898m for the year to 15 March compared with £772m a year earlier.

But like-for-like sales, which strip out trading at new stores, excluding fuel, rose by just 0.2%.

The firm said it had maintained market share in a "tough retail environment".

In January, the supermarket announced chief executive Justin King was to leave in July after 10 years.

Mr King is credited with the transformation of Sainsbury's fortunes during his 10-year tenure in charge of the supermarket.

Sainsbury's chairman David Tyler pointed out that under Mr King customer transactions had increased by 10 million a week to around 24 million.

He added annual sales had grown by £10.3bn to £26.4bn, while underlying pre-tax profit had trebled.

Mr King will be succeeded as chief executive by Sainsbury's commercial director Mike Coupe in July.

'Challenging' outlook

Sainsbury's, which has been in a battle for a number of years with Asda to be the UK's second largest supermarket chain, said underlying profits rose by 5.3% to £798m, ahead of analysts' forecasts.

But the company warned that trading was expected to remain tough.

"While the general economic outlook is showing some signs of improvement, conditions in the food retail sector are likely to remain challenging for the foreseeable future as customers continue to spend cautiously," Mr King said.

In March, Sainsbury's reported its first quarterly fall in like-for-like sales for nine years, with sales down 3.1% in the 10 weeks to 15 March.

Tesco, Sainsbury's, Asda and Morrisons have all seen their market share squeezed by both low-cost rivals such as Aldi and Lidl and higher end supermarkets such as Marks & Spencer food and Waitrose.

The big four have responded by cutting prices in an attempt to stem the loss of customers to the low-cost chains.

Sainsbury's and Tesco have lowered prices on basic products such as baked beans, bread and milk, and last week Morrisons said it would cut prices on more than a thousand of its products.

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