Sainsbury's online 'far from profitability'

Despite spending £50m on its Internet shopping operations, Sainsbury's is a long way behind rival Tesco in the online grocery stakes

UK supermarket group Sainsbury's said on Wednesday that it will probably take nearly two more years before its online shopping operations reach break-even point.

The company, which has so far failed to match the success of rival Tesco when it comes to Internet shopping, released its financial results for the year ending 31 March, 2002. These figures showed that its Internet service, called Sainsbury's To You, made a £50m hole in its operating profits.

Sainsbury's To You achieved sales of around £110m last year. It received some 27,000 orders per week, and now covers 71 percent of UK households.

"During the year we launched the service into 20 stores bringing the total nationwide to 53 stores, including three refurbished stores in Manchester," said chief executive Sir Peter Davis. "We expect this business to be profitable in the second half of 2003/04."

Even if Sainsbury's To You does manage to hit break-even point between 31 September, 2003 and 31 March, 2004, it will still be some way behind Tesco.

Tesco.com achieved sales of £356m last year, and -- significantly -- is already profitable, according to results released last month. It handles around 85,000 orders per week and covers 95 percent of the UK population.

Overall, Sainsbury's underlying operating profits for the last year were £515m. Taking out Sainsbury's For You from the calculations, the company's operating profits were £565m.


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