X Factor effect puts pounds on chain's figures

Chief executive Justin King said the increase in sales at its recently relaunched Taste the Difference ready meals range reflected the trend to stay at home, but eat well.

The upmarket range has seen a mid-teens percentage rise in sales since the September relaunch fronted by celebrity chef Jamie Oliver.

"People are staying in rather than going out to eat," said Mr King. "People are watching The X Factor and other TV shows, but they're eating well whilst they're doing it."

He was speaking yesterday as the group announced an eight per cent rise in pre-tax profits to 332m for the six months to October 2.

Sales climbed seven per cent to 11.94bn and rose two per cent on a like-for-like basis, beating its main rivals Tesco, Leeds-based Asda and Bradford-based Morrisons.

Last month Sainsbury's dismissed Morrisons' claims that it was trading ahead of its rivals, adding that Sainsbury's was now outperforming all of its peers.

Sainsbury's said it had attracted record customer numbers with transactions up one million to over 20 million.

The group is speeding up its expansion plans to help it to cope with the tough economic outlook.

The group has identified Yorkshire as a key target area for growth and recent store openings include York, which opened in September, and two openings last week in Sheffield and Haxby in North Yorkshire.

Mr King said he had seen no sign of a North/South divide.

"We're not seeing a poorer performance in the North," he said. "If particular towns have public sector job cuts, we'd see a downturn, but it hasn't happened yet. Customers are not shopping differently."

As part of its push into the North, Sainsbury's is backing regional sourcing of products. Following the success of the region's Wensleydale Jervaulx Blue cheese in 20 stores in Yorkshire, it is now being sold nationwide in 300 stores.

The group has also introduced Yorkshire Fine Fettle, the Yorkshire equivalent of feta cheese made with sheep's milk, in 35 stores across Yorkshire.

In addition to its push in the North, Mr King plans to expand Sainsbury's online offering after internet grocery sales rose over 25 per cent.

He is also focusing on non-food ranges such as clothing and homewares. Mr King said that non-food sales are growing three times the rate of food.

Data from market researcher Kantar Worldpanel on Tuesday showed Sainsbury's sales growth is outstripping its major rivals.

Gemma Lovelock, retail analyst at TLC Marketing Worldwide, said the group's results reflected "an entrenched stay-at-home culture" over the past two to three years.

"People are not just eating more at home they are also drinking more at home and the supermarkets generally are benefiting from this behavioural shift," she said.

But some analysts are concerned that big expansion plans by all the UK's major grocers could hit industry returns.

Sainsbury's shares closed down one per cent last night, a fall of 4p to 373.2p.

The group said it was working hard to keep prices lower in the face of rising food costs, but said customers were shopping more intelligently with the same customers buying from both its basics and premium ranges.

Sainsbury's has a small team assessing the Chinese retail market and is likely to look at India and other developing markets although the group said a move overseas was neither imminent nor certain.

The group's underlying operating margin rose eight basis points to 3.36 per cent.

CONVENIENCE KEY TO GROWTH

SAINSBURY'S has pinpointed convenience stores as a key area for growth.

The grocer said its convenience stores were now producing 1bn of sales a year.

Sainsbury's has identified Yorkshire as a key target area for expansion and is sizing up a number of sites for new stores.

The group is keen to expand out of its Southern heartlands into Yorkshire, Lancashire, the North East and Scotland.

While it has a 20 per cent market share in the South, it has only 10 per cent in the North.

In Yorkshire its market share is only 11 per cent, making it a key target area for expansion. The group has 40 stores in Yorkshire, out of a total of 872.