SAINSBURY’S is going ahead with its plan for a new store at Colchester’s Hythe – despite reviewing its expansion plans in the wake of a financial crisis.

The supermarket giant submitted an application to convert the B&Q store, in Lightship Way, in March.

But after announcing pre-tax losses of £290million for the last six months, Sainsbury’s looks set to ditch plans for dozens of new superstores.

However, it is not withdrawing its application in Lightship Way.

Tim Young, borough councillor for St Andrew’s, said: “It looks like they are going ahead with the application.

“I spoke to planning officers who had queried this with Sainsbury’s, and it confirmed it wished to proceed.”

Ron Levy, of Colchester Retail and Business Association, said it makes sense for Sainsbury’s to see the planning process through.

However, he doubts if the store will ever be built.

He said: “I would be very surprised if Sainsbury’s goes ahead.

“The firm is reviewing the situation regarding large stores. The fashion is now for convenience stores.

“If Colchester Council gives the plans the thumbs down, I think Sainsbury’s will breathe a sigh of relief.”

Sainsbury’s had the third biggest share of the market, behind Tesco and Asda, but its profits have been damaged by the growing popularity of budget chains Aldi and Lidl.

A Sainsbury’s spokeswoman said: “We are reviewing our plans across a number of supermarket sites. Once we are in a position to do so we will update people.”