Sainsbury's beats forecasts with sales hike

J Sainsbury has posted second-quarter sales towards the top end of forecasts, as new stores, online shopping and demand for non-food lines helped it to grow share in a tough market.

The group said it expected conditions to remain difficult for shoppers as the government hikes taxes and cuts spending to rein in its debts.

But it was confident of coping, thanks to its expansion strategy which also includes opening more convenience stores.

Sales at stores open over a year rose 2.9 per cent in the 16 weeks to 2 October, excluding fuel but including VAT sales tax.

That is up from 1.1 per cent in the first quarter and compares with the average forecast of 2.3 per cent in a Reuters poll of eight analysts.

Sainsbury, with over 525 supermarkets and 300 convenience stores, said total second-quarter sales rose 6.6 per cent. It is the third largest supermarket chain in the UK behind Tesco and Asda.

While demand was held back by higher petrol prices, the group said new stores were performing ahead of its expectations, non-food sales were growing at three times the rate of food and online sales were rising over 25 per cent.

Chief executive Justin King said: "Our clothing sales have led the charge. Our non food ranges are three times up in terms of our underlyisng sales as a whole."