Second consecutive quarterly fall in like-for-like sales at Sainsbury’s as supermarket price war goes on
- Credit: PA
Sainsbury’s has posted a second consecutive quarterly fall in sales amid the continuing supermarket price war.
Britain’s second biggest supermarket, which recently completed a £1.4bn takeover of Argos owner Home Retail Group, reported a 1.1% drop in like-for-like sales excluding fuel during its second quarter.
However, Sainsbury’s insisted that it had made progress in terms of total sales, including a positive contribution from Argos.
Chief executive Mike Coupe said: “We continue to make progress against our strategy and, while like-for-like sales were down 1.1%, driven by food price deflation, we delivered like-for-like transaction growth across all channels and total volume growth.”
Sainsbury’s added that Argos notched up like-for-like sales growth of 2.3% during the period, covering the 16 weeks to September 24. The group plans to open 200 new digital collection points by the end of the financial year, with 39 Argos digital outlets due to be open in Sainsbury’s stores by Christmas.
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Together with rivals Tesco, Asda and Morrisons, Sainsbury’s is embroiled in a brutal price war which has eroded margins as the UK’s so-called “Big Four” supermarkets seek to retain market share in the face of competition from discounters Aldi and Lidl.
Sainsbury’s pledged to “remain competitive”, adding that it has made further investments in the prices of everyday items such as broccoli, onions and its frozen deep pan Margherita pizza.
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“We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear,” said Mr Couple.
“However, Sainsbury’s is well positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers,” Mr Coupe said.
Julie Palmer, partner and retail expert at Begbies Traynor, said Sainsbury’s was lagging behind its rivals.
“Yet again, Sainsbury’s has failed to turn around its weak sales performance, in stark contrast to the recent momentum seen by two of its largest competitors, Morrisons and Tesco, whose recovery seems to be gathering pace.
“It remains too early to tell what material benefits Sainsbury’s will garner from the integration of Argos. However, current sales figures look promising.
“Over the next six months, investors will be keeping a close eye on the supermarket chain to see if the £1.4bn deal can deliver the significant cost savings and diversified shopping experience that Sainsbury’s hopes it will.”