LONDON, June 20 British grocer J Sainsbury
and Denmark's Dansk Supermarked plan to spend an
initial 25 million pounds ($42.64 million) to bring the Netto
brand back to the UK, seeking a slice of the country's
fast-growing discount sector.
The two companies said on Friday they have formed a joint
venture that will see 15 Netto stores opened in the UK by the
end of 2015, with the first opening in northern England later
If the trial is successful, the next stage of the joint
venture will see the new stores rolled out across the country,
in a bid by Sainsbury's to win a slice of the UK discount sector
currently valued at about 10 billion pounds ($17 billion) in
annual sales. The sector is forecast to double in value in the
next five years, according to data from industry body IGD.
The return of Netto is also an attempt by Sainsbury's to
stop market share losses to the fast growing German discounters
Aldi and Lidl.
The discounters have been winning business from Britain's
"big four" grocers - Sainsbury's, market leader Tesco,
Wal-Mart's Asda and Morrisons.
The Netto name left the UK market in 2010 after Asda
purchased its UK store estate. Asda bought Netto's 193 stores
and converted them to an Asda fascia.
Under the deal, Sainsbury's and Dansk Supermarked will each
initially invest 12.5 million pounds in the joint venture.
Taking account of start-up costs, each partner expects to incur
a post-tax loss of about of 5-10 million pounds up to March 31
($1 = 0.5864 British Pounds)
(Reporting by James Davey; Editing by James Macharia)