Sainsbury's focus is on strategy, not takeover frenzy

·2-min read
FILE PHOTO: The coronavirus disease (COVID-19) outbreak in London

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By James Davey

LONDON (Reuters) -The boss of Sainsbury's said on Tuesday his focus was on delivering the British supermarket group's strategy rather than the takeover frenzy that has gripped the sector.

Shares in Sainsbury's, Britain's second largest grocer after market leader Tesco, are up 24% so far this year, buoyed by bid speculation.

That started in April when Czech billionaire Daniel Kretinsky raised his stake in Sainsbury's to just under 10% and has been fuelled over the last two weeks by a bid battle for Morrisons, the No. 4 player.

Asked by reporters if Sainsbury's board had received any takeover approaches, CEO Simon Roberts said: "If we had anything to update on, we'd be updating on it, so we've nothing to update you on."

"I'm not going to speculate on where things are in the wider sector," he said.

"We're very focused on our plan. We laid out a (strategic) plan in November to really deliver improvements for our customers and improve the value that we can create for our shareholders."

Roberts said better-than-expected trading in Sainsbury's latest quarter showed that plan was working.

The group's like-for-like sales, excluding fuel, rose 1.6% in the 16 weeks to June 26, its fiscal first quarter.

That was ahead of analysts' average forecast of a fall of 1.7% and compared to a rise of 11.3% in the previous quarter.

The sharp slowdown in growth reflected a tough comparison with the same quarter last year when shoppers stocked up for the country's first COVID-19 lockdown.

Sainsbury's said it outperformed competitors and grew market share, which it said reflected lower prices, more innovation and better customer service. A further 50 million pounds of price cuts were announced on Monday.

Grocery sales were up 0.8%, online grocery sales rose 29% and clothing sales jumped 57.6%.

General merchandising sales did, however, fall 1.4%, partly reflecting "global supply challenges" which Sainsbury's said are likely to continue for the remainder of the year.

Despite facing further tough comparative numbers as pandemic restrictions continue to ease and customer behaviour normalises the group raised its profit outlook.

It forecast underlying pretax profit of "at least" 660 million pounds in the 2021-22 year, up from previous guidance of about 620 million pounds and the 356 million pounds made in 2020-21.

Industry leaders have warned that Britain could face gaps on supermarket shelves this summer due to a major shortage of truck drivers.

"We are getting products to store, but not necessarily every product," said Roberts.

"We're working hard to make sure we can maintain availability but clearly there are challenges in the upward supply chain."

(Reporting by James Davey; editing by Michael Holden, Kate Holton and David Evans)

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