Bond was probably hoping that his Sainsbury’s counterpart Justin King would have taken his eye off the ball in recent months, distracted by the company’s long-running flirtation with Qatari fund Delta Two (and before that a private equity consortium led by CVC). But no such luck. Today Sainsbury’s reported a 20% increase in profits to £232m, beating analyst’s expectations, along with a 4% rise in like-for-like sales and a 2.8% increase in overall turnover. Not bad for a company that’s spent the entire year beating off suitors with a very sharp stick.
Asda’s figures, on the other hand, were slightly less impressive. Its profits last quarter were slightly down on this time last year, which it blamed on a price war in the sector over the summer. It insisted that it was ahead of plan and that its aggressive price cuts were winning new customers, but next to Sainsbury’s stellar results the numbers look pretty lacklustre.
Elsewhere in the sector, research group TNS suggests that Morrison is finally getting its act together. Sales at the UK’s number four chain were apparently up 10% last month, providing another competitive headache for Asda.
But if Bond was shaken (not stirred), there was plenty of reason for King to be cheerful. As well as increasing profits, Sainsbury’s has also taken the first step to realising some more value from its huge property portfolio, something that investor Robert Tchenguiz has been nagging them to do for months. The supermarket said today that it was launching a joint venture with Land Securities to develop three freehold properties. With an expected value of about £113m, this is a fairly minuscule part of the group £8.6bn property empire, but every journey of a thousand miles and all that.
King was even bullish about the coming quarter, despite the expectation that consumers would have to tighten their belts. The result could be that we spend more money eating nice food at home, rather than going out to restaurants, he thinks. And given the impeccable judgement he has consistently shown since taking over as Sainsbury’s boss, who are we to argue?
