Partly Cloudy

Partly Cloudy

max temp: 16°C

min temp: 9°C

ESTD 1874 Search

Retail: Nine-year run of sales growth at Sainsbury’s comes to an end

08:54 18 March 2014

Justin King, chief executive of, Sainsbury

Justin King, chief executive of, Sainsbury's

Archant

Supermarket Sainsbury’s today warned that the market is growing at its slowest pace for nearly a decade as it broke a nine-year run of underlying sales growth.

shares

The group revealed that like-for-like sales excluding fuel slumped 3.1% in the 10 weeks to March 15, marking a sharp reversal of recent fortunes and the first fall after 36 consecutive quarters of rising sales in a row.

Outgoing boss Justin King said the group came up against tough comparatives from a year earlier when it outperformed many rivals amid the horsemeat scandal and benefited from the timing of Mother’s Day and Easter trade.

But he stressed that the market was facing tough conditions in the latest downbeat trading statement from one of the “big four” players as cost-conscious consumers increasingly turn to discounters such as Aldi and Lidl.

He said: “The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers.”

He added: “Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year.”

The group’s fourth-quarter sales decline was steeper with fuel included, falling by 3.8%.

Experts at Shore Capital Stockbrokers slashed full-year profit forecasts for Sainsbury’s as they said the sales slide was slightly worse than already-downbeat expectations.

But Sainsbury’s appeared to resist being drawn into the price war waged by its three main rivals to take on the might of the discount chains.

Morrisons last week followed the lead of Tesco and Asda, pledging to invest £1billion over three years after it tumbled to a £176million annual pre-tax loss and warned over results for the year ahead.

The dismal figures from Morrisons sparked a shares rout among listed supermarkets amid worries over a full-blown price war.

All four of the major players have reported sliding sales in recent months, while the likes of Aldi and Lidl have benefited from a switch to cheaper alternatives.

But despite the fourth-quarter sales plunge, Sainsbury’s said it had continued to outperform its main rivals and bucked the trend for falling market share, held at 17% in the 12 weeks to March 2, according to recent Kantar Worldpanel data.

Instead of unveiling a swingeing price-cutting campaign, Sainsbury’s highlighted the “value for money” of its popular own-brand ranges, claiming they were already 20% cheaper than branded equivalents and now make up more than half of all sales, at 51%.

It also put faith in its growing clothing ranges, boosted by a collaboration with designer Gok Wan, convenience store business and online delivery offering.

The group saw a million transactions in one day across its 91 convenience stores for the first time during its fourth quarter and said growth remained strong at 15%, while online grocery trade rose by 6%

Shore Capital’s retail analysts said the sales results will be a “particular disappointment” for Mr King, who steps down after 10 years at the group’s annual meeting in July, when he will hand over to commercial director Mike Coupe.

They said: “We will be interested to see how Sainsbury’s approaches the greater discount challenge. Whilst it is not losing out to the same extent as its peers, we do not believe that Sainsbury’s is blind to the challenge.”

shares

0 comments

Sizewell C groundwork

Disappointment was voiced last night over renewed uncertainty for Suffolk residents waiting for a decision on Sizewell’s new nuclear reactors.

Part of the rectory garden near Bury St Edmunds for which Bungay-based Deakinlock has received a nomination in the 2015 Society of Garden Designers Awards.

Bungay-based Deakinlock Garden Design, owned by Jason Lock and Chris Deakin, has been shorlisted in the annual Society of Garden Designers (SGD)Awards.

Cross Country Carriers is set to benefit from an expansion of the Palletways network to Bulgaria and Romania.

Logistics company Cross Country Carriers, based at Saxham, near Bury St Edmunds, is extending its international reach to offer a full range of distribution services to Bulgaria and Romania.

A jackup rig pictured in the River Deben this week

A structure which appeared in the River Deben between Felixstowe and Ramsholt this week is helping contractors behind a Suffolk off-shore wind farm survey the surrounding area.

Sisters Hannah Huntly and Beth Cook at their Baker & Barista coffee house which is changing its name to Applaud Coffee due to a trademark issue.

An independent coffee shop is changing its name following a trademark clash.

John Dugmore of Suffolk Chamber with West Suffolk MP Matt Hancock.

Suffolk Chamber of Commerce has praised a pledge by ministers to give small firms a greater chance of securing Government contracts in the future.

FoxyBingo owner bwin.party has jilted suitor 888 Holdings in favour of a £1.1billion cash-and-shares offer from Sportingbet owner GVC.

The first container train to pass over the Ipswich chord rail link in Ipswich.

Seven Conservative MEPs from across East Anglia and the Midlands have challenged the European Commission over its refusal of funding for a scheme which would have helped to shift millions of tons of freight from road to rail.

Ipswich businesswoman Melissa Day who is raising funds for an educational project working in the tea plantations of Sri Lanka

Ipswich businesswoman Melissa Day is planning a special Sri Lanka themed event at the Indian Palace restaurant in Ipswich, for a cause close to her heart.

A branch of cash and carry chain Booker.

Cash and carry chain Booker has been given the green light by the competition watchdog for its £40million takeover of Londis and Budgens.

Most read

Most commented

Topic pages