EAST BRIDGEWATER, Mass. (FNS) -- Operating income at Shaw's Supermarkets here rose 44% to $36.3 million in the first half ended Sept. 24. Sales rose 7.6% to $1.11 billion for the 28-week period. In the year-ago half, Shaw's posted an operating profit of $25.2 million on sales of $1.04 billion, according to J. Sainsbury, the United Kingdom-based parent company of Shaw's. Rosemary Thorne, Sainsbury's finance director, said Shaw's performance was "outstanding," with a 0.8% increase in like-for-like sales at a time of negative food price inflation. The 87-store company has an estimated 5% price advantage over its major competitors and the increasing rollout of private-label products is improving its gross margin, Thorne said. Shaw's should have about 2,300 private-label products by the end of the year, covering more than 20% of sales, Thorne added.
Shaw's performance also was helped by the changes it has made in the last few years in buying, systems and logistics. The company has cut costs aggressively, with better distribution productivity and lower labor costs, Thorne said.
Sainsbury expects to open only two Shaw's stores this fiscal year, which is less than the seven or eight expected originally, because of tight zoning regulations in the Massachusetts market. It will step up the opening program next year with eight stores, including five that will move the chain into the Connecticut market. The five primarily are in the greater Hartford area.
Overall, Sainsbury's reported a 4.5% increase in after-tax profit to $481.66 million (295.5 million pounds) on an 8.2% rise in sales to $10.34 billion (6.35 billion pounds) in the first half. Currency conversions were made at the rate of $1.63 per pound. This compares with an after-tax profit of $460.8 million (281.2 million pounds) on sales of $9.56 billion (5.87 billion pounds) in the corresponding period a year earlier.