Oh my Gok: Clothing range pushes Sainsbury's profits up 6.6%

The supermarket has been trying to cash in on consumers trading down - and it might just be working.

by Emma Haslett
Last Updated: 06 Nov 2012
For most retailers, the past few months have been fairly diabolical, consumer spending-wise. For supermarkets, on the other hand, things aren’t so bad – as illustrated by this morning’s results from Sainsbury’s, which reported a 6.6% rise in half-year profits, to £354m (although admittedly, that’s down from the 8% rise it saw during the same period last year). Sainsbury’s said that’s partly down to initiatives it’s taken to help cash-strapped shoppers to make savings – and partly to do with the help of that darling of lumpy middle-aged women everywhere, TV’s Gok Wan…

But it’s still tough out there: like-for-like sales including VAT, which strips out petrol sales and the effect of changes in floorspace, rose by a more modest 1.9% during the six months to 1 October – pushing up total sales by £7.6bn to £12.8bn. Better than Tesco. The supermarket added that it’s even managed to rake together £50m in cash, which helped it to offset higher costs. And it seems it lucked out where property is concerned, too: apparently, the value of its properties rose by £400m to £10.9bn.

Let’s be honest: not even Sainsbury’s is above economic turmoil. And with neither the middle-class following of Waitrose, nor the bargain-basement attraction of Asda and Morrison’s, Sainsbury’s occupies the tricky middle ground. With consumers beginning to ‘trade down’ again in their droves, the supermarket is working hard to find a way to retain its customers, with the launch of campaigns like its ‘feed your family for £50’ initiative, for instance, and with new products, like a new clothing line designed for its Tu range by TV presenter Gok Wan (the creatively titled ‘Gok for Tu’). Last month, it even joined the supermarket price wars, offering to match its prices to those of Tesco and Asda.

Those initiatives are working: customer visits rose by about a million a week during the period, to 22 million. But rivals are doing better: Sainsbury’s share price has suffered over the past few months as Tesco gains market share. That’s reflected in its net debt, which rose by £301m to £2.1bn. Although given the state of retail as a whole at the moment, it could be much worse.

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