Sainsbury's in vow to fight price rises
Supermarket price cuts and special offers would help spare shoppers the worst effects of rising inflation, Sainsbury’s chief executive Justin King pledged yesterday.
He said the industry had dramatically increased the number of promotions since the start of the year as stores and their suppliers fought for customers.
King said that across the sector £3 out of every £10 spent in supermarkets involved goods on special offer, up from £2.20 a year ago.
The level of discounts available explained why supermarkets had been reporting inflation at the checkout of about 2 per cent, against this week’s official rise in the cost of living of 3 per cent.
“The official measures don’t pick up those promotional exercises properly,” said King.
Offers, such as 25 per cent free and Bogofs (buy one get one free) were being funded by the supermarkets and manufacturers. He added: “Suppliers are charging through the door with their cheque books wanting to fund promotions.
The reason you see lots of promotions is in part because suppliers are falling over themselves to support them.
“In the past six months, we have been seeing strong pressures on the cost of goods. A good deal of that hasn’t been passed on in retail prices. We are fighting hard on price.”
King was speaking as Sainsbury’s reported underlying profits up 28.4 per cent to £488million in the year to March 22. Allowing for one-off items, which swelled the previous year’s figures, bottom-line pre-tax profits rose £2million to £479million. Total sales were up 5.8 per cent to £19.3billion.The shares fell 15bp to 374dp.
Since King took charge three years ago, sales have risen £2.7billion, ahead of his £2.5billion target, and a profits decline has been reversed.
The 117,000 staff will share a bonus pot of £47million, averaging £400 each, while King will pick up about £6million in cash and shares.
* Tesco unveiled its biggest acquisition with the $1.9billion (£958million) purchase of 36 Homever hypermarkets in South Korea where it already runs 66 hypermarkets and 72 express stores.