Sainsbury’s sales better than forecast

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Sainsbury’s has reported a better than expected performance over Christmas but unlike its other “big four” rival Wm Morrison, it failed to grow same store sales over the key festive trading period.

Like for like sales excluding petrol at the supermarket chain – which recently admitting to a making a surprise approach to buy Argos-owner Home Retail – fell 0.4 per cent over the 15 weeks to January 9, although this was better than the 0.6 per cent decline that had been forecast by analysts, writes Nathalie Thomas.

Total sales – which include sales contributed by stores that weren’t open a year ago – rose 0.8 per cent. Sainsbury’s has been expanding further into small, convenience stores and opened a further 16 outlets during the third quarter.

Sainsbury’s had been expected to emerge the main winner out of the big four grocers over Christmas, with data from research group Kantar Worldpanel yesterday suggesting that it was the only one of its closest rivals to increase sales over the 12 weeks to January 3 (see chart below)

But Wm Morrison surprised the market yesterday with a slight 0.2 per cent increase in same store sales over the nine weeks to January 3, excluding petrol. Tesco reports it figures tomorrow.

Mike Coupe, chief executive of Sainsbury’s, said the group had performed well in a highly competitive market. The chain now expects same store sales in the second half of the year to be better than the first. He said:

We have traded well during the festive period in a highly competitive market. Our stores delivered excellent levels of service and availability and we launched several new seasonal products and range improvements. As a result we have seen our market share grow in the quarter.

Mr Coupe, who has been chief executive of Sainsbury’s since July 2014, has been looking for ways to cut through the tough competition in the UK grocery sector. The German discount chains Aldi and Lidl continue to increase their share of the market at a rapid rate, while the big four grocers are also anxious about new competitive threats, with Amazon having launched a food delivery service in Britain at the end of last year.

Home Retail said the approach from Sainsbury’s at the end of last year undervalued the group but many analysts now regard the owner of both Argos and the DIY chain Homebase to be “in play”.

In a statement to the stockmarket last week, Sainsbury’s spelled out what it believes to be the virtues of combining with Argos, which has built up a strong delivery network and would allow Sainsbury’s to offer customers a greater choice of non-food products while doing their grocery shopping. Homebase is expected to be sold off.

Picture above from Getty.

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