Sainsbury's shares on the up after better-than-expected sales as it avoided 'horsegate'
Sainsbury’s boss Justin King has urged the Government to provide tax relief in tomorrow’s Budget to help businesses create new jobs, after it posted market-busting sales in its fourth-quarter.
The UK’s third-biggest grocer’s strong performance was driven by storming sales of its own-brand groceries, clothing and online food, and it also got a trading boost by emerging unscathed from the horsemeat scandal that has dragged in competitors.
Its chief executive since 2004, King called on George Osborne to avoid any “shocks for consumers” and to boost spending in the economy by handing employers a six- to 12-month “national insurance holiday” for new staff. He said: “If the Chancellor has money to spend, he should invest in job creation.” King, who served on the Prime Minister’s Business Advisory Group for two years, admitted that Sainsbury’s would be a beneficiary of such a policy, as it is taking on 6,000 new staff this year. But he said it would provide a much bigger boost to the Government’s coffers by taking people off benefits, lifting consumer spending and eventually delivering higher tax receipts.
Sainsbury’s, which has nearly 1,100 stores, delivered like-for-like sales up by 3.6% over the 10 weeks to March 16, which smashed City expectations and put its rivals in the shade.
Market leaders Tesco and Asda recently reported sales rises of 1.8% and 0.1%, respectively, while Morrisons suffered a 4.1% fall in its fourth quarter. King said: “This is the best performance in terms of outperforming the market for a while, if not ever.”
He said Sainsbury’s had “routinely carried out DNA testing on our products for over 10 years”. Excluding frozen beef and ready-meals, Sainsbury’s sales of meat, fish and poultry rose by 10%.
In 2011, the grocer launched its “brand match” price initiative, which gives customers a money-off coupon at the till if the branded products in their basket would have been cheaper at Tesco or Asda, and today King took a pot-shot at Tesco’s rival scheme, which also compares own-brand products. He said: “We and our customers don’t think it’s a fair comparison on own-label.”
Analysts expect Sainsbury’s full-year profits to rise by 4% to £743 million, although this will still be substantially less than Tesco and Morrisons.
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