Sainsbury's profits soar by 28%

9:35am Wednesday 14th May 2008

Sainsbury's has crowned a three-year turnaround plan by ringing up bumper annual profits of £488 million.

The figure for underlying pre-tax profits, which was slightly ahead of City estimates, represents a rise of more than 28% compared with the previous year. Sales for the year to March 22 were 5.8% ahead at £19.3 billion.

The retailer said it had exceeded a series of targets set down under the "Making Sainsbury's Great Again" scheme, which was launched in 2005 by chief executive Justin King. Around 117,000 staff will also share a £47 million payout this year - an average of £401 each - as part of the success.

Chairman Philip Hampton said: "This year has been particularly significant for Sainsbury's since it marked the completion of the Making Sainsbury's Great Again recovery plan announced in October 2004 and we moved from a period of recovery to growth."

Sainsbury's has put on an extra £2.7 billion of sales during its turnaround plan, compared with a target of £2.5 billion. Customer numbers per week have also grown from 14 million to 16.5 million, it said.

The retailer has also enjoyed 13 consecutive quarters of like-for-like sales growth, including the most recent quarterly hike of 4.1%. Comparative growth for the full year to March 22 was 3.9%, seeing Sainsbury's outperform industry leader Tesco.

Mr King, who joined from rival Marks & Spencer in March 2004, said turning around the business meant fixing many "fundamental" parts of the business.

He said: "The plan was based on delivering great quality food at fair prices. To achieve this on an ongoing basis we needed to fix many fundamental parts of our operation.

"Only by satisfying customers and improving sales could we return to sustainable growth in both sales and profitability and this has driven everything we have done over the past three and a half years."

He is now in line for a multimillion-pound payout, potentially worth as much as £9 million as a result of his success.

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