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Sainsbury's targets the north and west but slows overall expansion

Sainsbury’s will focus its store expansion in the north and the west of the UK in the year ahead but will also slow its rate of expansion, it said this morning.

The country’s third biggest grocer reported a 7 per cent increase in underlying pre tax profit in the year ending 17 March 2012, up from £665 million in 2010/11 to £712m this year, as sales rose 6.8 per cent to £24.5 billion.

Pre tax profit at J Sainsbury, including exceptional items, was down from £827m to £799m, which factored in £83m through disposal of properties, compared with £108m the year before.

The UK’s third biggest grocer – which has a property portfolio now valued at £11.2bn - said it opened a further 1.4 million sq ft of gross space last year, adding 19 new supermarkets, 73 convenience stores and 28 store extensions.

Total space increased 6.4 per cent, from 19.1m sq ft (March 2011) to 20.4m sq ft (March 2012).

In June 2009, the company decided to accelerate its investment in new space, taking advantage of the relatively low cost of land and higher availability at that time.

The firm said today: “Next year, we plan to return to space growth of around 5 per cent per annum.

“We will continue to open a mix of convenience stores, supermarkets and extensions and to ensure that our core estate is kept up-to-date and competitive through our refurbishment programme.

“We have a healthy future pipeline of space ready for development, including planning consents for almost 70 supermarket extensions and we will continue to manage our portfolio with discipline.”

The company added: “Around 25 per cent of the UK population is not within a 15 minute drive of a Sainsbury’s. Therefore our focus for new store openings is the North, the West, Wales, Scotland and Northern Ireland - areas in which Sainsbury’s has historically been under-represented and capital costs per sq ft are typically lower. This gives us the opportunity to expand our store estate and drive growth. “

The supermarket said it will continue its joint venture development strategy with British Land and Land Securities.

Contractors are due to start work on its Fulham Wharf regeneration project in summer 2012, and the Land Securities jv has submitted planning applications for 180,000 sq ft of supermarket space and a further 500,000 sq ft of commercial floor space.

When stores are fully developed, Sainsbury reviews them for potential sale and leaseback, to release capital to reinvest in profitable growth, generating £83m last year.

 

Store nos and retail space at 17 March 2012
 
 
 
 
 
 
 SupermarketsConvenienceTotal
 
Number

Area

000 sq ft

Number

Area

000 sq ft

Number

Area

000 sq ft

       
At 20 March 2011
55718,19937790993419,108
New stores197507316092910
Disposals/closures(4)(127)(10)(35)(14)(162)
Extensions/downsizes/refurbishments-498-(7)-491
At 17 March 201257219,3204401,0271,01220,347

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