Sainsbury invests in new outlets despite stagnant UK economy

Despite a stagnant economy and growing competition, J. Sainsbury Plc, the third-largest retailer in the UK, invested £682 million in the first of its fiscal in opening 600,000 sq ft of new space. It would be investing £1.2 billion in 1.4 million sq ft of new space during the full year.

''I don't think we should be apologising for investing in the UK economy,'' said Justin King, chief executive of the company. ''I think it is fantastic, and frankly, we should be celebrating a British business investing north of £1 billion in our economy.''

The company reported a 6.6 per cent growth in first-half profits. Pre-tax profit went up to £354 million. Analysts said it was a robust performance considering tough industry conditions in the UK.

''Our further good sales growth reflects our continued hard work to help our customers cope with the tough economic environment,'' said King. ''We expect the economic environment to remain challenging for the foreseeable future, but we are confident of further good progress in the Christmas period ahead.''

Sainsbury reported £50 million of savings in H1 and aims to double it for the entire year. The savings came mainly from improved vehicle efficiencies and route optimisation.

With growing petrol costs, consumers were reducing their spending on weekly grocery shopping. To tackle this, Sainsbury has been offering a discount of 10 pence a litre of petrol when shoppers spend £60 in a store. It recently introduced a ''brand match'' campaign – in response to Tesco's "big price drop" – to lure more customers.