Britain's major supermarkets are feeling the pinch as they battle against discounters, but Sainsbury's has managed to deliver a jump in annual profits.
In the year to March 15, pre-tax profit rose by 16.3% to £898m. However, not taking into account trading at new stores, sales rose by just 0.2%.
Sainsbury's said that although consumer confidence is gradually recovering, household budgets remain under pressure. 'Savvy shoppers are shopping more frequently, topping up their supermarket and online shop in convenience stores and discounters throughout the week to manage their budget and food waste,' the firm said in a statement.
Its shares rose 1.6% to 339p in early morning trading, making them the second-biggest gainers in the FTSE 100 on Wednesday morning. However, by mid-morning they had dipped to around 336.8p.
Britain's biggest supermarkets - Tesco, Asda, Sainsbury's and Morrisons - have all felt the strain as discount chains such as Lidl and Aldi have seen sales rise.
But Sainsbury's said it was confident its focus on own brand products, the 'Brand Match' pricing scheme and the Nectar loyalty card, would allow it to outperform rivals in the year ahead.
Sainsbury's results are Justin King's last as CEO. During his 10 years as chief executive, he has transformed Sainsbury’s from a struggling brand living on past glories to a trim, toned and feisty retail competitor.
Customer transactions have risen by 10 million a week to around 24 million and annual sales have grown by £10.3bn to £26.4bn, while underlying pre-tax profit has trebled. Until March this year, Sainsbury's had achieved its 35th consecutive quarter of growth over a period of nine years.
King also won MT’s coveted Britain’s Most Admired Leader award at the end of last year and will speak at MT's inaugural MT Live conference in June about how businesses can gain a competitive advantage.
'In a competitive retail environment we have focused on delivering high quality, affordable own-brand products across all our channels,' he said of today's results. 'While the general economic outlook is showing some signs of improvement, conditions in the food retail sector are likely to remain challenging for the foreseeable future as customers continue to spend cautiously.'
Sainbury's results come a month after Tesco reported a fall in profits for the second year in a row. The UK's biggest supermarket chain said group trading profit fell 6% to £3.3bn, with like-for-like sales down 1.4%.