Sainsburys sets up joint venture to re-launch Netto in UK

20th Jun 2014 09:11

Supermarket group Sainsburys is teaming up with Danish group Dansk Supermarked (DS) to bring discount retailer Netto back to the UK.Sainsbury's is launching a joint venture with DS to open 15 Netto stores in the UK by the end of 2015, with the first opening in northern England later this year.The pair plan to roll out the new format across the country if the trial succeeds.Each partner's initial investment in the joint venture will be £12.5m, and given start-up costs, each expects a post-tax loss of about £5-10m by March 2015.The new Netto stores represent a complete departure from the format that left the UK market in 2010.They will offer fresh food offer as well as an in-house bakery with Danish bread and Danish pastries.DS Chief Executive Per Bank said: "It's great to be bringing a new twist to the rapidly-growing UK discount sector."Sainsbury's Chief Executive Designate Mike Coupe said: "This joint venture provides a great opportunity for us to gain exposure to the high-growth discount market for the first time."If successful, this trial has the potential to open up a new long term growth opportunity for us complementing our fast expanding convenience, online and non-food businesses, as well as our existing supermarket estate."The UK discount sector is worth an estimated £10bn in annual sales and is forecast to double in value to about £20bn in the next five years.Shares in Sainsburys fell 1.8p or 0.56% to 319.5p at 09:07 in London.PW