Sainsbury's recovery exceeds expectations

The recovery of supermarket chain Sainsbury's exceeded expectations today after the group posted its fifth quarter of sales growth in a row.

The retailer, buoyed by the success of its Try Something New campaign, weighed in with a like-for-like sales rise of 5.3 per cent for the 12 weeks to last Saturday, against hopes in the City for a figure closer to 4 per cent.

Chief executive Justin King said Sainsbury's had attracted an additional one million customers to its stores in the past six months, as the chain benefits from improvements made in the first year of its recovery plan.

Mr King said: "The sales growth announced today shows that customers are noticing the many improvements we have been making to our business."

Today's update carried extra significance as analysts believed annual sales growth would be harder to achieve because of comparisons with the start of the Making Sainsbury's Great Again recovery plan a year ago.

But like-for-like sales growth showed an improved trend, with today's figure of 5.3 per cent bettering the 5.2 per cent seen in the previous quarter and the 2.1 per cent achieved in the first half of the financial year. Including petrol sales, like-for-like growth stood at 5.7 per cent, while sales across the group improved 6.7 per cent.

Recent data from research group TNS showed Sainsbury's accounted for 16.2 per cent of grocery sales in the UK, just behind second-placed Asda but a long way from the 30.4 per cent controlled by industry leader Tesco.

As well as the benefit of its Try Something New Today campaign - advertised by celebrity chef Jamie Oliver - Sainsbury's has reported higher sales of organic produce and a surge in demand for its premium Taste the Difference range.

The Sainsbury's fightback - following the first loss in its 135-year history - has included the recruitment of more staff and investment in prices, a move which resulted in a 2.2 per cent fall in grocery prices over the past quarter.

As part of the Making Sainsbury's Great Again initiative, the chain aims to add £2.5 billion to total sales by March 2008.