THE INVESTMENT COLUMN : Sainsbury checks out new goals

Much has been made of the battle for market share between Sainsbury and Tesco. This has the look of a rather desperate struggle for a market that both sides would probably admit is reaching saturation point. Sainsbury, the current loser in the battle of the statistics, is certainly playing down the significance of a few percentage points here and there. Turnover is vanity, profits is sanity, it says. True up to a point.

There is little doubt over Sainsbury's position as a profits machine. Profits for the year to March rose by 10.5 per cent to £809m on sales that improved by 7.5 per cent to £12bn, making it Britain's largest retailer.

What seems to have happened is that Tesco has stolen the high ground as far as innovations and derring-do are concerned. Its Tesco Metro format has proved popular and its loyalty card, launched only weeks ago, already has more than five million subscribers.

Sainsbury is currently adopting a more cautious strategy in the newly restricted retailing world where the supermarket giants can no longer open out-of-town superstores at the rate of one a week. While Tesco has expanded into smaller, city-centre stores and taken the battle to Europe, Sainsbury is concentrating on squeezing higher profits from what it already has while expanding its interests in the US.

It will only open 12 new UK superstores this year but will modernise 82. Another 19 are begin extended and will be the first to have upmarket meat and fish counters selling Aberdeen Angus and swordfish. In the last three years, the range at a typical Sainsbury supermarket has expanded from 16,000 lines to 19,000.

While Tesco is expanding in Europe with interests in France and Hungary, Sainsbury is keenly pursuing the American dream of buying into a regional chain and expanding it. Shaw's and Giant, in which Sainsbury acquired a minority stake last November, are both doing well. Mr Sainsbury, however, says he has no plans to buy up the rest of Giant.

It also has another string to its bow with the DIY businesses of Homebase and the recently acquired Texas Homecare.

Such diversifications are all very well but it is UK supermarkets which still account for the lion's share of profits, so the City will be looking for some new ideas. UBS is forecasting pre-tax profits for next year of £890m, which on yesterday's closing price of 430p puts the shares on a forward p/e of 13.6, a slight premium to the market. In the short term, few fireworks can be expected.

Start your day with The Independent, sign up for daily news emails
News
Courtney Love has admitted using heroin while pregnant with Frances Bean Cobain, her daughter with Kurt Cobain
people
Sport
Murray celebrates reaching the final
tennis
Life and Style
life
Arts and Entertainment
'The Archers' has an audience of about five million
radioA growing number of listeners are voicing their discontent; so loudly that even the BBC's director-general seems worried
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Day In a Page

Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee
World War Z author Max Brooks honours WW1's Harlem Hellfighters in new graphic novel

Max Brooks honours Harlem Hellfighters

The author talks about race, legacy and his Will Smith film option to Tim Walker
Why the league system no longer measures up

League system no longer measures up

Jon Coles, former head of standards at the Department of Education, used to be in charge of school performance rankings. He explains how he would reform the system
Valentine's Day cards: 5 best online card shops

Don't leave it to the petrol station: The best online card shops for Valentine's Day

Can't find a card you like on the high street? Try one of these sites for individual, personalised options, whatever your taste
Diego Costa: Devil in blue who upsets defences is a reminder of what Liverpool have lost

Devil in blue Costa is a reminder of what Liverpool have lost

The Reds are desperately missing Luis Suarez, says Ian Herbert
Ashley Giles: 'I'll watch England – but not as a fan'

Ashley Giles: 'I'll watch England – but not as a fan'

Former one-day coach says he will ‘observe’ their World Cup games – but ‘won’t be jumping up and down’
Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness