Sainsbury's creates £60m bonus pot as golden run continues

Staff at Sainsbury's will be cheering its decision to put £60m aside to pay bonuses, as pre-tax profits leapt by 12.8% to £827m in the first quarter of 2011, with like-for-like sales increasing 2.3%.

Sainsbury's: st rong Christmas performance boosted first-quarter profits
Sainsbury's: st rong Christmas performance boosted first-quarter profits

The results, which included total sales reaching £22.9bn compared to £21.4bn a year ago, build on the strong performance over the Christmas period, when Sainsbury's was the clear winner out of the big four supermarkets and overtook Asda in market share.

The supermarket again increased its market share in the year to March, according to Kantar, rising two points to 16.3%, although this was lower than its share over the Christmas period.

Justin King, chief executive of Sainsbury's, said: "Sainsbury's has continued to perform well. Customer numbers are at an all-time high of 21 million transactions every week, which is up one million on last year – a clear indication of our growing universal customer appeal across all channels.

"We have added gross space of 1.5 million sq ft to our store estate, creating over 6,000 new jobs with Sainsbury's. Strong sales growth, combined with productivity savings and tight control on operating costs, has helped to deliver good profit growth.

"Our colleagues continue to deliver great service, exceeding our stretching customer service targets, and we are delighted to be paying our colleagues a bonus of around £60m."

King added: "We expect the economic environment to remain uncertain over the coming year. We remain confident that our strategy, alongside continued strong operational performance, will enable the business to make further good progress."

Sainsbury's has not participated in the increasingly bitter price war between Tesco, Asda and Morrisons since the New Year, instead focusing its marketing on quality and ethical or green issues, which has resonated with consumers in the recession.

The supermarket said it would extend its TU clothing range, with non-food growing at three times the rate of grocery items and 40% of new store space being set aside for non-food.

It has also signed a deal with TV fashionista Gok Wan to design a range of clothing for TU, to launch in the autumn.

The group also plans to accelerate its convenience stores and begin rolling-out its Fresh Kitchen sandwich brand to 200 stores.

Gemma Lovelock, retail marketing analyst at TLC Marketing, said: "Like other supermarkets, they have benefited from the stay-at-home culture that has grown out of the recession. 

"Sainsbury's will have picked up some of Waitrose's market share, as its shoppers downgrade to reduce weekly spend. They may even have picked up share from the lower end of the market, as people staying in decide to splash out that little bit more."

Sainsbury's last week launched a £10m campaign to promote a '£50-a-week' deal.

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