Sainsbury's sales grow 5% as non-food lines grow strongly

J Sainsbury has outstripped market leader Tesco with strong sales in the second quarter, thanks to demand for non-food lines and the relaunch of its Taste the Difference brand.

Excluding fuel, total sales climbed 5.2% in the 16 weeks to 2 October while like-for-like sales, which exclude new stores, were 2.9% ahead, up from 1.1% in the first quarter. The figures, which include VAT, were at the top end of City expectations.

"Pretty impressive," said Nick Bubb at Arden Partners, adding that there could be small upgrades to annual profit forecasts.

By contrast, Tesco reported just 0.4% like-for-like growth yesterday, although this number excludes VAT. Analysts said this implied a fall in sales volumes, once food price inflation was stripped out.

Justin King, Sainsbury's chief executive, said: "We've delivered another strong performance and grown market share."

The group expects conditions to remain tough amid tax hikes and government spending cuts - VAT goes up to 20% from 17.5% in January - but is confident that its expansion strategy will see it through the downturn.

The company said its non-food lines were growing at three times the rate of food. Following the relaunch of its £1bn Taste the Difference brand in September, its 1,000 plus premium product range, Sainsbury's said that its new Bistro range had already become a hit with customers, with slow-cooked lamb shanks and roasted pork belly proving popular.

Online sales are up more than 25%.

Sainsbury's opened seven supermarkets, 12 convenience stores and completed seven extensions - in total adding 460,000 sq ft of new space. It opened its largest store ever at Crayford in Kent, with 100,000 sq ft.

Source : Julia Kollewe - Guardian.co.uk