Sainsbury is to announce year-end results next week that will show boss Justin King's turnaround strategy is motoring - although analysts said the focus would be on how the supermarket could now deliver better margins.
The retailer is expected to report profits of around £265m on Wednesday (May 17) on a turnover of £16.2bn for the year to March 31. It is a far cry from last year's prelims, when King delivered the news that profits had collapsed from £610m to just £15m (The Grocer, May 21, 2005, p6).
Mike Dennis, an analyst at Cheuvreux, said: "They've gained market share and sales have gone up strongly in the second half. The industry has tightened up because of massive discounting by Asda, so we will be looking at margins going forward. It will also be interesting to hear what Justin King has to say about sustaining growth rates."
The figures themselves will not be high on the agenda, he added, with the City looking for more details about Sainsbury opening up further retail space. Investec analyst Ingrid Boon said she also expected general confirmation that sales growth remained buoyant. However, she echoed concerns over margins. "We don't expect any margin recovery until October or November. But it will be a positive outlook next week."
One area where King may reassure over margins is in non food growth. Sainsbury has launched a new project, 'compelling non foods', which shoehorns general merchandise into a store without reducing food volumes.
It has already been piloted in ten stores, which stocked Sainsbury's first foray into mobile phones, fine jewellery and car care.
The retailer is expected to report profits of around £265m on Wednesday (May 17) on a turnover of £16.2bn for the year to March 31. It is a far cry from last year's prelims, when King delivered the news that profits had collapsed from £610m to just £15m (The Grocer, May 21, 2005, p6).
Mike Dennis, an analyst at Cheuvreux, said: "They've gained market share and sales have gone up strongly in the second half. The industry has tightened up because of massive discounting by Asda, so we will be looking at margins going forward. It will also be interesting to hear what Justin King has to say about sustaining growth rates."
The figures themselves will not be high on the agenda, he added, with the City looking for more details about Sainsbury opening up further retail space. Investec analyst Ingrid Boon said she also expected general confirmation that sales growth remained buoyant. However, she echoed concerns over margins. "We don't expect any margin recovery until October or November. But it will be a positive outlook next week."
One area where King may reassure over margins is in non food growth. Sainsbury has launched a new project, 'compelling non foods', which shoehorns general merchandise into a store without reducing food volumes.
It has already been piloted in ten stores, which stocked Sainsbury's first foray into mobile phones, fine jewellery and car care.
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