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Sainsbury's Unveils Property Deal, Sales Rise

Reuters
Wednesday, 26 Mar 2008 | 1:33 PM ET

British supermarket retailer J. Sainsbury reported a 4.1 percent rise in like-for-like sales excluding fuel in the fourth quarter, above expectations, and said it saw "strong growth" in sales of non-food items.

It also announced a 1.2 billion pound property joint venture with British Land covering 39 retail sites.

Sainsbury's shares closed 6.4 percent higher on the upbeat trading figures and property deal.

Sainsbury's, Britain's third largest grocery retailer by market share, echoed rivals such as Asda and WM Morrison Supermarkets and said that the market remained competitive.

A squeeze on credit and rising housing bills are crimping consumer spending, although British shops enjoyed far stronger sales than expected in February, data showed last week.

"Consumers are facing real increases to their cost of living," Chief Executive Justin King said in a statement.

A poll of 7 analysts by Reuters showed expectations for Sainsbury's like-for-like sales growth excluding fuel, a key measure referring to stores open at least a year, ranged from 3.2 percent to 3.8 percent for the 12 weeks to March 22.

Sainsbury's performance shows that its business had not suffered as was expected next to a resurgent Morrison's, a reason behind its weak share performance in recent days.

It is the worst performer among European supermarket groups in the DJ Stoxx index of European retailers in the month to date.

Expectations that Britain's largest retailer Tesco will launch a price war, to the detriment of Sainsbury's, have also pushed down its shares.