Sainsbury's set to take advantage of the downturn
Sainsbury's has today released plans for a significant expansion of the company's operations which will see store space increased by 15% before March 2011. In a bold move the Sainsbury's management have decided to use problems for some of their competitors to grab a larger share of the UK grocery market. Today's announcement was followed by a £432 million fund-raising exercise which will be completed over the next few weeks.
After a difficult few years it now appears that Sainsbury's is well and truly back on track and looking to attack the likes of Asda and Tesco. The company has had a significant following for some time and even though it did lose its way many customers remained loyal throughout. If the Sainsbury's management is able to deliver a 15% increase in store space, with the vast majority centred upon the non-food activities of the group, this should result in a significant increase in profitability due course.
When compared to the likes of Tesco, Sainsbury's return on capital is significantly less at just 10% which does give scope for further improvement in due course. Many analysts and shareholders will be monitoring the situation very closely over the next few weeks.
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