Sainsbury’s has claimed it is winning over customers from its rivals after reporting higher than expected profits.

The country’s second-largest supermarket chain announced on Thursday its underlying pre-tax profits were £701m for the 2022/23 financial year.

The figure is up 1.6% on the previous year’s haul of £690m – and ahead of company forecasts that it would make between £670m and £700m.

It comes amid fierce competition from rivals, with Sainsbury’s crediting the gains to its Aldi Price Match campaign and its move to provide better prices to Nectar card holders.

The firm said: “In January we doubled the number of products price matched to Aldi, with over 600 products now included across fresh, grocery and household ranges.

“We also made it easier for customers to identify lower prices in store by moving all of our entry price point products into a single brand, Stamford Street and by introducing Low Everyday Prices, which has replaced Price Lock and includes over 1,000 products, primarily branded.”

Total sales for the 12 months to the end of March were £36.3bn, up 3.4% year-on-year.

Sainsbury’s also said it expects “strong profit leverage in the year ahead”, with growth of up to 10% and underlying profit of up to £1.06bn.

It comes after the company announced cost-cutting plans in February, including 1,500 job cuts.

The preliminary results on Thursday said the chain launched nearly 1,200 new products during the year, while sales of its premium Taste the Difference range grew by 12%.

Much of the growth came from grocery sales, which were up more than 9%.

However, clothing was down 6.4%. The company said there had been “a bit” of disruption to supplies following attacks on shipping in the Red Sea region.

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Like-for-like sales, excluding fuel, rose 4.8% in the fourth quarter.

However, this was the firm’s slowest growth for more than a year and down on the 7.4% rise in the previous three months.

Statutory pre-tax profits were £277m in 2022/23, down more than 15%, largely due to a restructuring of the company’s banking division.

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Chief executive Simon Roberts said: “We said we’d put food back at the heart of Sainsbury’s and that’s what we’ve done. Our food business is firing on all cylinders.

“We have the best combination of value and quality in the market and that’s winning us customers from all our key competitors, driving consistent volume market share growth as more customers choose us for their weekly shop and all their special occasions.”

Last year Sainsbury’s reported a 5.4% rise in sales but a 5% fall in pre-tax profits.

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