Newspaper article The Journal (Newcastle, England)

Sainburys Checks out a 10% Rise in Its Profits; Taking Stock

Newspaper article The Journal (Newcastle, England)

Sainburys Checks out a 10% Rise in Its Profits; Taking Stock

Article excerpt

Byline: Peter McCusker

A BUSY week for blue-chip results sees figures from Sainsbury's, Vodafone and BT, while the Bank of England's latest economic forecasts are likely to make grim reading.

The UK's third biggest supermarket, Sainsbury's, is expected to post a 10% rise in interim profits on Wednesday.

Analysts are predicting underlying profits of between pounds 260m and pounds 270m from a period of intense competition between the UK's biggest grocers.

Sainsbury's posted like-for-like sales growth of 4.3% for the 16 weeks to October 4 - slightly better than market expectations - but the City seized on chief executive Justin King's comments over a "particularly challenging" economic environment.

The firm - along with Tesco - has fought back with campaigns such as 'Feed your Family for a Fiver' and by growing its own label basics range to 550 products to help customers on tighter budgets.

Despite concerns over discount rivals, Royal Bank of Scotland analyst Justin Scarborough said fears over customers trading down were overplayed and the store was in fact picking up shoppers deserting the likes of Marks & Spencer and Waitrose.

"We believe the market is underestimating how far Sainsbury's business model has moved over the past four years," Mr Scarborough added.

The firm's share price however suffered a recent blow when tycoon Robert Tchenguiz sold a 10% stake in October after ailing Icelandic bank Kaupthing - one of Mr Tchenguiz's financial backers - called back a loan.

Mobile phone giant Vodafone posts its first results with new chief executive Vittorio Colao at the helm tomorrow. In July Mr Colao took over from former head Arun Sarin - who led the company for five years. But he comes to the job at a difficult time as investors worry about the impact of a looming recession on the business.

Although still one of the biggest companies in the FTSE 100 Index - worth some pounds 57bn - Vodafone's shares have fallen by almost half since the beginning of the year.

The company took a particular hammering in July after it suffered from weaker trading in the UK and Spain, as well as lower than expected sales of equipment such as handsets and USB data cards in the three months to June 30. …

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