Mortgage News Sainsburys And Wal Mart Weather Crisis But US Mortgage Companies Suffer 1575
Sainsbury’s and Wal-Mart weather crisis but US mortgage companies suffer
15 May 2008 / by Rachael Stiles
Sainsbury’s has announced that pre-tax profits are up 28.4 per cent to £488million on last year’s figures. Retail sales are up 5.8 per cent to £19,287million from £18,227million. The supermarket has exceeded its target on sales growth of £2.5billion, up to £2.7billion, the thirteenth consecutive month of like-for-like sales growth.
And, despite household budgets being squeezed, it has reported an additional 2.5million customers coming through its doors, now totalling 16.5million a week compared with 14million in 2005.
Philip Hampton, chairman, said: “This year has been particularly significant for Sainsbury’s since it marked the completion of the Making Sainsbury’s Great Again (‘MSGA’) recovery plan announced in October 2004 and we moved from a period of recovery to growth.”
And, in America, discount chain Wal-Mart, which has more than 350,000 stores, has revealed that it is off to a “solid start”, with net sales for the first quarter of the fiscal year approximately 10 per cent higher at $94.1billion, and net income up 6.9 per cent to more than $3billion.
“We continue to deliver against the business model that Sam Walton started – selling branded merchandise for less.” said Lee Scott, president and CEO of Wal-Mart Stores Inc. “Our business is even more relevant to our customers today, given the current economic pressures.”
Traffic is growing at Wal-Mart stores, driven up by the rising number of people in affluent areas shopping there, which is indicative of the fact that middle class Americans are now resorting to shopping at discount stores in order to make ends meet, as food prices, energy costs and mortgage rates rise.
Mr Scott added: “Our customers appreciate that Wal-Mart is the consistent price leader. We continue to make progress in delivering on our mission of saving people money so they can live better.”
Meanwhile, trouble could be afoot for US mortgage providers Fannie Mae and Freddie Mac which, it has been said, might not have enough capital to withstand the property market crash.
Richard Shelby, senior Republican on the Senate banking committee, has told the Financial Times that the companies are “thinly capitalized, highly leveraged” and that they pose a “systematic risk to taxpayers” because they are guaranteed by the Government.
© Fair Investment Company Ltd