subject: Sainsbury Profits Up On New Stores And Cost Control [print this page] Reporting it's H1 results today, UK No3 grocer, J Sainsbury said total sales (including VAT, and fuel) were up 7.6% (4.3% excluding fuel), with like-for-like sales up 1.9%. Tight control of costs helped grow underlying operating profit by 7% to 396 million, by negating inflationary increases.
JS have added a gross 596,000 sq ft of new space, with seven new stores (including two replacements), 15 extensions and 37 convenience stores, which bring the convenience stores total to 400. As a result of the investment programme, their property value has increased to an estimated 10.9 billion, as at 1 October 2011. This uplift of 0.4 billion has been driven by investment in new stores and extensions, whilst the yield has remained stable at 4.9%.
David Tyler, Chairman, said:
"We are pleased with our sales and profit performance, given the challenging economic environment. We have continued to make good progress against our five areas of focus, strengthening our position for the long-term, particularly the investment in our food and clothing ranges as well as new channels and services. Our interim dividend is 4.5 pence, which is in line with our policy to pay this at 30% of the previous year's full-year dividend."
Shares in JS closed last night at 300p valuing the firm at 5.638 billion.
Central London landlord Great Portland Estates, today in it's H1 report up to September 30, said first-half profit fell 31% after the companys redevelopment programme left buildings vacant. Net income dropped to 79.1 million from 115.8 million. Pretax profit excluding changes in asset values declined to 10.4 million, or 3.4 pence a share.
Net assets of 1,167.9 million are up 5.0% from March 2011, and are 378p per share, whilst gearing remains comfortable at 40.5%, with cash and undrawn facilities of 250 million at the end of H1. Since March on a LFL basis the portfolio has increased in value by 3.9%, while rents have also grown by 2.5%, voids are 3.2% and delinquencies only 0.1% of the rent roll.
Toby Courtauld, Chief Executive, said:
"Economic conditions and business sentiment have worsened since the summer with sovereign debt crises dominating the economic landscape. Within this more challenging environment, London's commercial property markets continue to out-perform the rest of the UK, benefiting from an excess of demand for assets over supply, and a vacancy rate of around 1% for West End Grade A office space. Despite this, we expect secondary and over-priced assets to see a price correction as buyers become more discerning."
"In our occupational markets, unsurprisingly, demand for space has reduced over the last quarter. So too has the level of expected new supply as development finance remains scarce. As a result, once sustainable economic growth returns, an impending supply crunch will strongly favour London's landlords."
Since March GPE has spent 195.8 million on acquisitions, whilst selling 106.6 million at a 6.2% profit to book value. In September, GPE purchased the Royal Mail Group's site at Rathbone Place, W1 and in October, the Great Ropemaker Partnership, their joint venture with BP Pension Fund, bought 200 & 214 Gray's Inn Road, WC1. These two purchases are both are set to benefit from the opening of Crossrail (expected in 2018).
In all GPE has a development pipeline of 23 projects, and is on site at 5, having just completed 184/190 Oxford Street, which has been handed over to Aldo on a 10 year lease at 920kpa. GPE announced a new 73 million bank facility for the development of an 18-story mixed-use plan on Blackfriars Road, in which GPE has a 50% stake.
Shares in GPE closed last night 8p below net asset value at 370p, valuing the firm at 1.158 billion.
