SAINSBURY FINANCIAL ANALYSIS

Sainsbury Financial Analysis

Sainsbury Financial Analysis

Executive Summary

This paper provides extensive financial analyses of Sainsbury PLC. This study will describe the importance of choosing the right financial strategy. Internal and external analyses of Sainsbury plc are performed in order to compare the company with the industry competitors like Morrison Plc and Tesco Plc. The company has become an example in the strategic management because of its successful implementation of the strategy. The financial analysis takes 2009 and 2010 years for comparison, although previous year's financials are also reviewed to determine the trends of the financial position of the company.

Analysis And History Of The Development Of The Company

J Sainsbury PLC was founded in 1869 and incorporated in 1922, London. For the past 140 years, the company grew rapidly; today it is one of the “big four” supermarket chain in UK. It currently sorely operates in UK and employs about 150,000 people. Its cooperation business is composed of four areas, which are supermarkets, online business, property market and banks. The Sainsbury supermarket operates a total of 890 stores comprising 547 supermarkets and 343 convenience stores around the UK (Company Profile for Sainsbury 2011). The stores are pride of providing health, safe, fresh and tasty food to its customers. It also jointly owns Sainsbury's bank with Lloyds Banking Group and has two property joint ventures with Land Securities Group PLC and the British Land Company PLC. Its total revenue (excluding the value added tax) in Fiscal Year (FY) #2010 was £19,964 million, which increased 5.6% from the last year. The underlying profits before tax grew to £610 from £519 million. The basic earnings per share increased 93.4% to 32.1 pence from 16.6 pence (Sainsbury Annual Report 2011).

The group business is consisted of retailing (supermarket and convenience), financial services (Sainsbury bank joint venture), and property investment (British Land joint venture and Land Securities joint venture). Thus all the revenue is generated by sales of goods and services from those three operating segments, which mean that interest revenue from bank and gain or loss from property investment, are all included in the income statement.

Food Retail Industry in United Kingdom

In 2009, the value of United Kingdom food retail industry increased by 3.1% to reach $186.1 billion. According to forecast for 2014, the United Kingdom food retail industry has a value of $219.4 billion, and increase of 17.9% since 2009. The compound growth rate of the industry from 2009-2014 is predicted to be 3.4%. With a market share rose to 16.5% over the 12-week period, from 16.3% a year ago according to Kantar (which monitors the household grocery purchasing habits of 25000 demographically representative households in the UK), Sainsbury is now the third position grocer in the UK. The No1 is the international brand Tesco PLC whose market share slip to 30.3% from 30.4%. Asda (note apply US GAAP), which is the subsidiary of Wal-Mart Stores Inc. fell to16.9% from 17%. Outside of the top four, Wm Morrison Supermarkets PLC maintained its market share at ...