Two failed takeover attempts at Sainsbury’s but profits up

Supermarket chain, J Sainsbury, has announced a 27% increase in first-half profits in spite of two failed takeover attempts this year. The UK’s third largest supermarket chain said it has formed a joint venture with Land Securities to develop its property potential.

Last week, Delta Two, the Qatari-backed investment fund, abandoned its £10.6 billion bid and shares in the supermarket fell almost 19% following the announcement. Delta Two said its decision to withdraw the bid was due to worries about the turmoil in the credit markets and concerns about funding Sainsbury’s employee pension schemes.

A previous takeover bid backed by private equity firms including Blackstone and CVC Partners, collapsed earlier this year.

Sainsbury’s reported underlying pre-tax profit of £240 million for the 28 weeks to October 6 compared with £189 million in the same period 12 months ago. Like-for-like sales, which do not include the impact of new stores, were up 4% excluding fuel, while total sales rose 4.7% to £9,998 million.

Chief executive, Justin King, said these results demonstrate their continued ability to grow the business. Sales growth has remained ahead of the market. Mr King added that while there were tighter constraints on current consumer spending, the supermarket had a strong Christmas offering.

Justin King has transformed the Sainsbury’s business since he took on the job 3 years ago. However, the supermarket is still behind Tesco and Asda in the UK grocery market.

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