LONDON: Justin King dismissed rumours he would quit as head of J Sainsbury, promising to steer Britain’s third-biggest grocer through the challenges of the next few years after another set of forecast-beating results.
Speaking after the group posted its eighth straight rise in annual profit on the back of a 10-year high in market share, King said he saw “a few more years in Sainsbury’s in me yet”.
The comments, following mounting speculation that he could move on after nine years as chief executive, came as the group posted a 6.2 percent rise in annual profit and higher margins, mainly due to a strong online and convenience store performance.
King said the group saw no near-term change in the economic situation in Britain, suggesting the next year could be tough for the broader retail sector, which has been hit hard as consumers battle high inflation and meagre wage growth.
But Sainsbury’s, whose market share is 16.8 percent, has stood out against rivals, benefitting from the success of its “Brand Match” pricing initiative, growing own-brand sales and a big push into non-food areas like clothing and home accessories, resulting in 33 consecutive quarters of underlying sales growth.
Unlike rivals Tesco and Asda it has also not been implicated in the horsemeat scandal, which broke in January when horse DNA was found in frozen burgers in British supermarkets, with none of its products testing positive.
King said the group’s strategy and understanding of its customers meant it was well-positioned for growth, although its 2013/14 forecast for like-for-like sales up between 1 and 1.5 percent disappointed some analysts.
Online sales and local convenience stores are the two fastest growing areas for Britain’s supermarkets as consumers turn to the Internet and local shops to avoid the high fuel prices incurred by trips to town centres and out-of-town malls.
Sainsbury’s convenience store business is growing at over 18 percent year-on-year, driven by a combination of new selling space and like-for-like sales growth, while online grocery sales are increasing nearly 20 percent year-on-year.
“Justin King has led Sainsbury to another year of steady progression in still challenging economic and sector conditions,” Shore Capital analyst Clive Black said.
“For that the ‘grandfather’ of the sector and his team now deserve considerable credit. Sainsbury has developed into a materially more resilient business than was the case when he took control of the reins.”
Reuters
