SANISBURY INC.

Financial Strategy of Sainsbury Inc.



Financial Strategy of Sainsbury Inc.

Introduction

J. Sainsbury is a grocery and retailing related store. It is comprised of three significantly large operating departments, which include vending (that is consist of superstore operations, accessibility and online store), financial services (that is consist of mainly company's joint venture with Bank), and real estate investments (that mainly covers company's joint ventures with British Land and Land securities). Sainsbury possesses up to 30,000 products along with complementary non food or non eatable items and several services in almost all stores. In addition, it also provides online shopping facility from its e-stores to residents of UK only (Mergent Online, 2012).

J. Sainsbury accounted for total revenues of 22,294,000 GBP, operating income of 792,000 GBP and a net income of 598,000 GBP during 2012. The basic earning per share increased by 6%, i.e. 28.1p, it has comprised about 16.6% of total market, the total sales have increased by 6.8% and it has recorded 22 million transactions of customers per week (www.j-sainsbury.co.uk/, 2012).

Sainsbury initiated its operations in 1869 and currently it is running more than 1000 stores and around 440 convenience stores. It has total 15,000 employees. Sainsbury believes in retaining and satisfying its customers and considers customers as king. It aims in investing more in its employees and distributors and suppliers to ensure the best quality of service provision to employees. It highly believes in managing its operations on the basic fundamental principles of its culture, ethics and values and creates a unique identity (Mergent Online, 2012).

Industry Review

The retail industry of UK added 11.3% of value to the gross domestic product of the country during 2011. It faced various pressures as well, which are altering shopping preferences and habits, and the decreased confidence of customers. The average number of VAT and PAYE registered companies decreased by 2.4% in 2011 from 2009 in terms of retail and wholesale trade. The employment in retail trade stood at 10% of total employment and employment in whole sale trade stood at 4.1% of total employment. The sales volume in retail industry has usually increased per year but the growth of this rate has decreased to 0.6% in 2009. The online shopping trend has been increasing yearly in retail industry and rose by 9.4% in 2012 and the total sales recorded per week on Internet in retail industry are 493 GBP million in June 2012.

Economic Climate in UK

The economic growth was witnessed as just 0.9% in the year 2011. It continued in 2012 as well, where the economic growth dampened by 0.4% in the first three months. It has resulted in increase in inflation, higher fuel prices, increase in tax rate for poor and rich, increase in debts and decrease in spending. However, the Olympics games had helped in combating with recession after affects and boosted economic growth by 1% in the third quarter of 2012. It mainly occurred as a result of higher spending by 0.6% by consumers, and services sector also grew by ...