Sainsbury's £44m war chest to take on Tesco

Jun 18 2009 by Iain Laing, The Journal

SUPERMARKET giant Sainsbury’s has stepped up its pursuit of market leader Tesco by building an additional £445m war chest to spend on store expansion.

The UK’s third biggest grocery chain is turning to shareholders for the cash to help fund a total £2bn strategy that will see it add around 2.5 million sq ft in store space by March 2011.

It has been encouraged by recent trading after it reported a record 7.8% rise in underlying first-quarter sales excluding VAT and fuel, compared with yesterday’s 4.3% growth from Tesco.

Around 40% of its new space will come from store extensions, allowing it to significantly boost its in-store non-food ranges, including clothing and homewares under its Tu label.

Sainsbury’s is also launching a non-food offering online this summer, which will sell 8,000 products from kitchenware to furniture.

Chief executive Justin King said yesterday: “Over the past four years we have reinvigorated our business and demonstrated the strength of Sainsbury’s brand with 18 consecutive quarters of like-for-like sales growth.

“The fundraising announced today will provide us with the financial flexibility to take advantage of current opportunities to grow our business further and faster.”