Sainsbury eyes £440m saving after bringing IT back in-house

High-street retailer J Sainsbury is on target to save £440m in costs a year after bringing its IT back in-house, company chief executive Justin King said today.

High-street retailer J Sainsbury is on target to save £440m in costs a year after bringing its IT back in-house, company chief executive Justin King said today.

King said he was "delighted with the effect" of taking back control of its IT systems.

Sainsbury outsourced most of its IT systems to Accenture in November 2000 before terminating the contract five years early in October 2005 at a cost of about £65m. It said at the time that it expected to recover the exit costs in less than two years.

Sainsbury was now using IT to help underpin above-inflation sales growth, said King.

This is a sharp turnaround from the retailer's performance three years ago, when it was losing market share because of difficulties with its logistics management system which meant it could not get products onto shelves on time.

An Accenture spokesman said the firm had not been responsible for Sainsbury's automated depots.

King said bringing control of IT back in-house had also improved product availability on the shelf and was underpinning sales growth.

King said having direct control over its logistics had helped Sainsbury achieve its 13th consecutive quarter of like-for-like sales growth. Like-for-like sales for the 12 weeks to 22 March were up 4.1%.

The move also helped the retailer deliver total extra sales growth of £2.7bn against a three-year target of £2.5bn, said King, enabling it to claw back lost market share.

King said the short first quarter and the early Easter had meant compressing a lot of business activity into 12 weeks. "I am delighted to say operations and [product] availability held up really well, and that underpinned sales growth," he added.

King also announced Sainsbury had paid £273m for a half-share in a joint venture with British Land, a property firm that leases 38 stores to the retailer. King said the investment would make it easier for Sainsbury to redevelop 25 stores over the next 10 years.

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