Sainsbury’s chief executive Justin King has forecast an “own-brand Christmas” after private label drove the grocer’s momentum in the lead up to the festive season.
Sainsbury’s said in its interim results today that its own-brand is growing at more than twice the rate of branded goods and its relaunched By Sainsbury’s and Taste the Difference ranges are showing double-digit growth.
Sainsbury’s chief executive Justin King said: “We’ve set out our stall to win at Christmas.”
He added: “We expect to see customers managing their budgets in the run up to Christmas to ensure they enjoy the special occasion. We also expect it to be an own-label Christmas too as customers want quality but don’t want to spend too much.”
Sainsbury’s value line, Basics, suffered marginal sales decline and it is in the process of relaunching the range.
Commercial director Mike Coupe said: “We’ve relaunched Taste the Difference and By Sainsbury’s and now it’s time to invest in Basics. There has been a lot of investment from the competition on value lines so we want to make sure we are great value and have the product right.”
He added on Sainsbury’s prices overall: “Our prices have never been sharper compared to the compeititon.”
Sainsbury’s this week reported underlying pre-tax profit up 7% to £400m for the 28 weeks to September 28, and total sales up 4.4% to £13.9bn.
Like-for-like sales for the half year including VAT, excluding petrol, were up 1.4%.
The grocer increased its market share to 16.8% – its highest for a decade – after completing 35 consecutive quarters of like-for-like sales growth.
Sainsbury’s also completed a property review of its pipeline and identified 15 to 20 edge-of-town sites where it no longer wants to build a supermarket. As a result it will suffer a one-off £92m impairment charge.
Chief financial director John Rogers said: “These are mostly edge of town sites where the town centre first planning policy is now redundant so it is no longer economically viable for us to open a supermarket.”
Sainsbury’s has also set aside £13m as a provision for a commercial item, which it said “for which we intend to defend our position”. Rogers said this cost is not allocated to the ASA decision on Tesco’s price mechanic which it is taking to judicial review, but rather it is “a separate matter where we need to defend our position”.
Sainsbury’s launched its Christmas ad campaign this week, featuring clips from film director Kevin Macdonald’s Christmas in a Day documentary.