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Sainsbury Profit Gains 6.2% as Grocer Adds to U.K. Market

Sainsburys

J Sainsbury Plc, the U.K.’s third- largest supermarket company, reported annual earnings that topped analyst expectations as a price-matching campaign helped boost its market share and said it will take full ownership of Sainsbury Bank.

Pretax profit, excluding one-time items, rose 6.2 percent to 756 million pounds ($1.2 billion) in the year ended March 16, London-based Sainsbury said today in a statement. That beat the 748 million-pound average estimate of 13 analysts compiled by Bloomberg.

Sainsbury was the only one of the four biggest U.K. grocers to win market share in the 12 weeks ended April 14, researcher Kantar Worldwide said last month. Customers turned to the grocer as it avoided the fallout from Europe’s horsemeat crisis and invested in price promotions. Sainsbury may take the number-two slot in the market from Wal-Mart Stores Inc.’s Asda chain by the end of the year, according to Barclays analyst James Anstead.

The supermarket chain also said it will pay Lloyds Banking Group 248 million pounds for the 50 percent stake in Sainsbury’s Bank to take full ownership. It will be funded from the company’s own resources, the statement said.

“Whilst we see no near-term change in the current economic situation we remain confident that by continuing to invest in our long-standing strategy” the company is “well positioned for future growth,” Chief Executive Officer Justin King said in the statement.

Sainsbury rose 1.4 percent to 396.50 pence in London trading yesterday. The stock has gained 15 percent this year.

(Source: Bloomberg)