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TRADING STATEMENTS: Jamie's advice leads to more improvements
(The Birmingham Post Via Thomson Dialog NewsEdge)Resurgent supermarket chain Sainsbury's stretched its record of sales growth yesterday after shoppers took up Jamie Oliver's advice to "try something new".
The advertising campaign featuring the celebrity chef helped the UK's third largest grocer lift like-for-like sales by 5.2 per cent in the 12 weeks to the end of the year - the com-pany's fourth successive quarter of improvement.
The trading update came a day after market research group TNS Superpanel said Sainsbury's had taken its largest share of the market for two years.
Closing the gap on second-placed rival Asda, TNS said Sainsbury's controlled 16.2 per cent of the grocery market, compared with 15.9 per cent a year ago.
The supermarket has revived its performance through better stock availability and a drive to improve service.
Chief executive Justin King said: "The customer experience is much improved, but we still need to achieve this at a more acceptable cost."
Sainsbury's said it served more than 19 million customers in Christmas week, the highest number of people through its tills in a single week.
Mr King added: "We prepared for Christmas well, developed outstanding seasonal products, strengthened promotional activity and worked hard to deliver great availability."
Grocery prices were one per cent lower in the third quarter as Sainsbury's carried out a pledge to invest in its offer to customers.
The fightback from Sainsbury's comes after it suffered the first loss in its 135-year history.
A year ago it launched the Making Sainsbury's's Great Again campaign, which aimed to add pounds 2.5 billion to total sales by March 2008.
As part of the drive, Sainsbury's went through a multi-million rebranding, including the introduction of its "Try Something New Today" advertising.
Mr King said in a statement it was not all plain sailing 15 months into his recovery plan, however.
He said: "We expect the market to remain highly competitive during quarter four when we will also be up against tough comparative figures with the annualisation of sales growth under our recovery plan."
Price deflation, which has become endemic in grocery retail amid a fierce price war, amounted to one per cent during the quarter, he said, repeating his assertion that the full benefits of the company's recovery plan would not be seen on the bottom line until the second half of the 2006/7 financial year.
Analyst David McCarthy of Citigroup said it would be hard to judge the overall success of Mr King's plan for some time yet.
He said: "Sainsbury's has improved like-for-likes against easy comparisons but has so far not proved it can deliver lower prices, sales growth, new stores, lower costs and margin growth simultaneously while trading against much tougher comparisons."
Charles Stanley analyst Simon Proctor added: "They're obviously good figures but they're coming from a very low base and it's coming at a considerable cost." Mr King, who has employed 3,000 extra workers to fix the company's supply-chain gremlins, conceded the company still had much to do to strip out the resultant extra costs.
He continues to predict the operational gearing benefit of rising sales will start feeding through into the bottom line in the second half of the 2006/07 fiscal year.
john_ marsden@mrn.co.uk
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