J Sainsbury in bullish mood

J SAINSBURY has pledged to dominate the grocery sector over the next decade, after reporting a stellar 11.3 per cent pre-tax profit hike to £543m in the year to 21 March.

Chief executive Justin King said the group now has “the greatest growth potential of any grocery retailer in the next ten years”.

Sainsbury’s has focused on marketing its budget own-brand ranges to snatch market share from upmarket rivals Marks & Spencer and Waitrose while fending off ultra-cheap Lidl and Aldi, as customers have cut spending during the recession. Its “Basics” range of budget foods now makes up 3 per cent of its total sales compared with 2 per cent in 2008.

Overall, sales rose 5.7 per cent to £20.4bn during the year thanks to the recession-focused strategy. The underlying retail profit margin was up 26 basis points to a healthy 3.26 per cent, although larger rival Tesco still boasts a UK margin of 6.2 per cent.

King added customer numbers have risen to 18m a week, from 14m when he joined five years ago.

He promised an expansion of the group’s retail space by 5 per cent this year, after the 4 per cent expansion last year, as part of the bid to dominate growth in the sector.

The group, which this year celebrates 140 years in business, unveiled a bumper 10 per cent dividend boost to 13.2p a share along with the confident results.

It confirmed Sir Philip Hampton is to step down from his role as chairman to focus on his high-profile job as chairman of RBS, and said senior independent director John McAdam is now hunting for a replacement.