Qatar-backed Sainsbury’s profit rise pushes its share to six year high

  • Share via facebook
  • Tweet this
  • Bookmark and Share

British grocer J Sainsbury, which is 25.9 percent owned by Qatar, showed its resilience to tough market conditions with a 7 percent rise in first-half profit, contrasting with a decline at market leader Tesco and lifting its shares to a near six-year high.

Sainsbury trails Tesco by annual sales and is battling Wal-Mart Stores' Asda to be Britain's No. 2 grocer, but has enjoyed 35 straight quarters of underlying sales growth, boosting its UK market share to a decade-high 16.8 percent.

Chief Executive Justin King said the group was well placed for more growth, even though he cautioned that any recovery in Britain's economy may take time to take effect as consumers' budgets are being stretched by below-inflation wage rises.

In February 2010, Qatar Holding bought 25.999 percent of the retailer. The firm is outperforming rivals with a strategy focused on own-brand products and investing in fast-growing online and local convenience store channels.

"It (Sainsbury) has seen off the dual threat of the fast-improving discounter Aldi and the premium Waitrose, giving Tesco a humiliating lesson in how it should be done," said John Ibbotson, director of the retail consultancy Retail Vision.

"The only question now is how long it can hang on to the hugely talented Justin King."

Sainsbury's own-brand sales are growing at more than twice the rate of branded goods, while online and convenience stores are the two fastest-growing areas in the grocery sector, as consumers increasingly use the Internet to shop and high fuel prices deter trips to town centres and out-of-town malls.

Sainsbury's online grocery sales rose by 15 percent in the half, while convenience store sales increased over 20 percent.

The group has also benefited from the success of its "Brand Match" price-comparison scheme, along with increased sales of non-food products, especially clothing, kitchen electrical and cookware.

In addition it avoided any involvement in a scandal over foods found to contain horsemeat when they were labeled as containing other meats.

Shares in Sainsbury, up 16 percent so far this year, were up 2.7 percent at 419 pence by 4.34 am ET on Wednesday, valuing the business at £7.8bn. The stock rose as high as 410p, its highest since early 2008.

Sainsbury's profit before tax and one-off items reached £400m ($637m) in the six months to September 28.

In stark contrast, Tesco last month posted a 1.5 percent fall in first-half UK trading profit.

Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Growth spurt for Gulf's e-commerce sector

Growth spurt for Gulf's e-commerce sector

The recent sale of to Germany’s Rocket Internet for...

How the UAE is sewing together a top industry

How the UAE is sewing together a top industry

In the shadows of oil and aviation, the UAE’s textiles industry...

Mall talk

Mall talk

Plans for Dubai’s Mall of the World have made headlines all over...

Most Discussed
  • 17
    Nakheel PR: The toughest job in Dubai?

    You forgot to mention the sewage pit between JLT and Jumeirah Park and the terrible landscaping in Jumeirah Park The chain link fencing they want to install... more

    Monday, 30 March 2015 9:05 AM - An Emaar Fan
  • 14
    Dubai Int'l T1 is too congested, says Indian airline boss

    Question: All you people, criticizing my comment, do you work for Air India by any chance?

    Additionally, for all the whiners, I will provide you... more

    Tuesday, 31 March 2015 12:50 PM - Mosa
  • 9
    Post traumatic stress?

    I once had a Emirates Post employee hang up on me when I asked her to repeat something. That said, the worst is my management company, Kingfield Management... more

    Sunday, 29 March 2015 6:07 PM - Sarah