Sainsbury’s shifts focus to non-food

SAINSBURY’S yesterday said 40 per cent of its sales would be “non-food” by 2020 as it increasingly relies on clothing and other products for growth.

The supermarket chain is in the middle of huge expansion with clothing and general merchandise being given more space.

Sainsbury’s reported a 12.8 per cent jump in annual pre-tax profits to £827m as it unveiled its strategy.

Like-for-like sales for the year to 19 March were up by 2.3 per cent. The group also said that it had won market share from rivals, taking it from 16.1 to 16.3 per cent. But chief executive Justin King (pictured) said growth of non-food sales – which are growing three times faster than food –?needed to be developed.

He said: “This will be the shape of things to come as we look at non-food. By 2020, 40 per cent of sales will be from non-food.” King denied analyst concerns about financial constraints on future expansion, saying the group had “plenty of funding”.

Credit Suisse analysts were disappointed by a 14 basis point increase in Sainsbury’s underlying operating margin, which they contrasted with a bigger rise at Wm Morrison Supermarkets. Net debt rose to £1.8bn from £1.5bn last year and is expected to hit £2bn by the end of next year.

But the company said its expansion would eventually ensure that figure was reined in. On the consumer outlook, King said: “Things are tough and consumers are being careful.

“However, as Easter showed, they do have money available to spend on special occasions.”