By Rebecca Burn-Callander Tuesday, 19 March 2013

Whoa, nelly! Sainsbury's sales up 2.1%

Britain's third-largest supermarket - one of the only chains untainted by the ongoing horsemeat saga - has posted bumper sales and record customer footfall for the year to 16 March.

While Tesco continues to battle the fall-out from horsemeatgate, Sainsbury’s has reaped the benefit, grabbing its rival's customers  in a warm orange embrace and storming ahead in the retail stakes. Sales growth for the past year has hit 2.1%, bumped up considerably by a spike in turnover in the last three months (up 7.1%).

But its recent success is not just down to its rivals’ misfortune. Sainsbury’s non-food offering – from clothes and gadgets to homewares and media – has performed especially well. Arguably, however, Sainsbury’s has Tesco to thank for this revenue boost too. It was Tesco, after all, who started the supermarket trend for moving away from mere consumables to selling everything under the sun. In the past year, Sainsbury’s has made a cool £1bn from the sale of non-grocery items.

Sainsbury’s won’t publish its profit figures till May, but early signs looks pretty good. The supermarket is currently on its 33rd consecutive quarter of rising sales and margins on its clothing range, which has been flying off the hangers, stand at 20%.

CEO Justin King is pleased as punch with his supermarket’s performance: ‘We have delivered strong sales in the fourth quarter, increasing market share and outperforming in what remains a tough retail environment. Over the quarter, we grew customer transactions to 22.9m per week, serving more customers than ever.’

King deserves a moment to bask in glory. Elsewhere on the high street, sales are falling, and the mighty supermarkets are having to work much harder for a share of the household spend. Last week, Sainsbury’s revealed a market share rise to 17% from 16.9% a year earlier, with Tesco standing still, thrashing its much smaller rival Morrisons. Over at M&S, boss Marc Bolland is down to his last life as like-for-likes continue to fall and the Qatari vultures circle, on the hunt for an easy takeover.

With this in mind, you can forgive King’s slightly smug and not-so-subtle dig at the likes of Tesco, Asda and Lidl. ‘We have invested heavily in our supply chain and sourcing credentials over many years, including initiatives such as our Farmer Development Groups,’ says King, [mumbling, ‘no horse here,’ under his breath]. ‘Our fresh chicken has been 100 per cent British since 2003, all of our fresh beef is sourced from the UK and Ireland and we have routinely carried out DNA testing on our products for over ten years. Our values are a long-term, strategic point of difference.’

All in all, a pretty solid performance. And the markets agree. Shares are up 2.5% in early trading.

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