Sainsbury's beats expectations as King prepares to hang up hat

Harriet Green
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In what are Sainsbury’s last results under chief executive (CEO) Justin King, the supermarket’s reported improving profits, despite what it calls a tough background.

Underlying profit before tax exceeded expectations, up 5.3 per cent to £798m last year.

That's its slowest growth in almost 10 years, but analysts had been expecting a much smaller rise of 3.5 per cent. Full-year pre-tax profit leapt 16.3 per cent to £898m.

Sales rose 2.8 per cent to £2.4bn, with like-for-like sales, excluding fuel, up by only 0.2 per cent. King said customers will remain cautious for some time to come, as conditions in the food sector “remain challenging”.

The results are solid, but the financial year for the supermarket’s been dubbed a year of two halves, with a clear slowdown at the end of the year.

Under King, who’s been with Sainsbury’s for 10 years, sales have doubled and profits tripled. But investor and analysts’ eyes now will be looking towards the future.

Concern over how resilient the mid-range supermarket will be as price war pressure hots up, along with the sustainability of its offering, will no doubt spark further discussion.

Speaking on Radio 4’s Today programme this morning, King said that the long-term prospect for the store is fantastic, and its long-term investors know that - they’re buying, rather than selling.

Sainsbury’s saw sales in general merchandise and clothing rose at over twice the rate of food in the year, but the outgoing CEO says work on cutting costs and running a tight ship mean it’s kept its head well above water.

Sainsbury’s market share is at its highest level in a decade, at almost 17 per cent, and its upped its dividend and bonus pool. Price, stresses King, is not the whole story - customers stay true to their values, too.

Mike Coup, currently commercial director, will be taking over from King when he steps down in July.