Sainsbury's profits rise to £665 million

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The Independent Online

Sainsbury's said today that its staff will share a bonus pot of around £60 million after it posted a 9% rise in annual profits to £665 million.

The pay-out for 124,000 workers, which compares with a bonus pool of more than £80 million last year, comes after the group overcame a faltering market to increase sales by 7.1% to £22.9 billion in the year to March 19.

Average customer transactions rose to 21 million a week, up 1 million on a year ago, while the chain also said it benefited from the opening of new stores and strong growth in non-food ranges.

Its Sainsbury's Local convenience stores broke through the £1 billion sales barrier for the first time and its online grocery delivery business grew by 20%.

The profits figures were slightly better than the City's forecast of £660 million even though the group recently shocked the market with worse-than-expected sales growth in its fourth quarter.

Sainsbury's said it had outperformed the market in challenging conditions, as household budgets were put under significant pressure from price inflation.

It claimed to have made cost savings to keep its prices low to attract cash-strapped consumers, which helped its share of the grocery market increase to 16.3% from 16.1% a year ago.

Non-food sales increased at three times the rate of its food sales, as it enjoyed strong growth in areas such as books and DVDs. Sainsbury's now claims its TU brand is the seventh largest clothes retailer in the UK.

The company's growth has also been boosted by opening 68 new stores, bringing its total to 934. Many of these were opened in Scotland, the South West and Wales where the supermarket was under-represented, while it also extended 24 stores, mainly in the South East.

Of its new store openings, 47 were convenience stores, which are typically showing faster sales growth than its supermarkets, bringing its total to 377.

Sainsbury's Bank also put in a strong performance after operating profits increased by 50%.

Chief executive Justin King said he expects the economic environment to remain uncertain over the next year but added that he was confident the supermarket would continue to make good progress.