In the money: Sainsbury's GM expansion boosts clothing sales
By Petah Marian | 9 May 2012
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Sainsbury's Gok for Tu collection has recorded strong sales |
Sainsbury's CEO Justin King has attributed growth in the supermarket operator's clothing business to an increase in space combined with a strong underlying product.
The UK-based retailer, which released its full-year results today (9 May) said its clothing business is growing faster than its food business and "continues to gain market share". Over the year, the number of stores offering non-food lines rose by 22 to 161.
Speaking to just-style, King said clothing has been a "big beneficiary of our non-food space" and clothing was the first "big space" the retailer put in that was non-food.
However, he was quick to emphasise success has also been seen from carrying through to clothing the values that set the retailer apart in its food offer. Sainsbury's clothing is "not necessarily the cheapest", but that it "absolutely delivers on our core 'live well for less' ethics".
There has also been a shift to what he describes as the "new thrift", a "recognition that value for money is more than a cheap price, and our clothing reflects that," using "better materials, Fair Trade and organic cotton."
King restated the shift in the company's sourcing strategy, with teams in Bangladesh, China and Hong Kong now buying directly as the retailer moves away from an agent model.
"We were sub-scale, we would buy through agents. But we are not a sub-scale business any more, we are the seventh biggest clothing retailer in the UK. Our buyers are taken pretty seriously when they go into a factory in Turkey, the Far East and the other countries we buy from, so it reflects the fact that we're a scale business," he said.
The comments came as the retailer reported a 7.1% increase in annual underlying profits to reach GBP712m (US$1.15bn) in the year to 17 March.
Underlying operating profit increased 6.9% to GBP789m, which resulted in margins rising by four basis points. Excluding fuel, operating margins were up by ten basis points.
Reported profit before tax was down 3.4% to GBP799m due to a series of one-off items, which also hit its bottom line. Net profit fell 6.6% to GBP598m.
Sectors: Apparel, Finance, Retail
Companies: Sainsbury’s
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