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Text Size 
Rising customer numbers, growth in non-food ranges and cost control helped J Sainsbury to post first-half profit towards the top end of forecasts, though Britain's No.3 grocer signalled a
tougher second half.
 |
Sharon Lorimer |
Forecasts ranged from 296-308 million pounds, with an average of 301 million, in a Reuters poll of 10 analysts.
Sales climbed 3.7 percent to 11.2 billion pounds, held back by lower petrol prices. Non-food ranges like clothing grew around 2.5 times the rate of groceries, and the firm said weekly transactions were up 800,000 year-on-year to over 18.5 million.
"As we enter the second half we expect the economic environment to remain challenging and market growth to slow due to reduced food price inflation," it said in a statement.
Britain's grocers have fared better than other retailers in the downturn thanks to their focus on essential items and rising food prices. But their shares have lagged in recent months as food inflation eased and amid signs of economic recovery.
An industry survey on Tuesday showed British retailers enjoying their best October for seven years.
Opportunities
"The numbers are slightly ahead of consensus and the comments from the company are as expected," said RBS analyst Justin Scarborough.
"What comes through is how much the model has developed over the last five years and the opportunities that lie ahead whether in food, new space, non food or online," he said, keeping a buy rating on Sainsbury [SBRY-LN
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] shares and a price target of 370 pence.
Sainsbury defied fears it would suffer in the recession from its mid-market position by taking custom from upmarket rivals like Marks & Spencer [MKS-LN
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] and holding onto budget-focused shoppers with promotions like "feed your family for a fiver."
But recent market data have shown it falling behind bigger rivals like Tesco [TSCO-LN
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], which is benefiting from the relaunch of its Clubcard loyalty scheme,
as well as smaller upmarket chain Waitrose.
Asda, Britain's second-biggest grocer, is due to report third-quarter sales on Thursday.
Sainsbury hiked its interim dividend by 11.1 percent to 4 pence a share and said the estimated value of its properties had increased by 1 billion pounds to 8.5 billion.
The firm's shares have underperformed the DJ Stoxx European Retail Index by 17 percent this year as investors have focused on more cyclical retail shares amid signs of a recovery.
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Data is a real-time snapshot *Data is delayed at least 15 minutes