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Sainsbury's sales fall for seventh consecutive quarter Sainsbury's upgrades profit forecast
(35 minutes later)
Supermarket chain Sainsbury's has reported its seventh consecutive quarter of falling underlying sales. Shares in Sainsbury's have jumped after it said full-year profits were set to be better than expected.
Its shares rose 12% despite the company reporting its seventh consecutive quarter of falling underlying sales.
Life-for-like sales, which exclude the effect of new store space, fell 1.1% excluding sales of fuel. Total sales excluding fuel were up 0.3%.Life-for-like sales, which exclude the effect of new store space, fell 1.1% excluding sales of fuel. Total sales excluding fuel were up 0.3%.
The company said it was making good progress despite "food inflation impacting many categories". Sainsbury's said it was making good progress despite "food inflation impacting many categories".
And it said that its full year underlying pre-tax profits would be a bit better than currently expected. The supermarket group said it now expected full-year underlying profits to be "moderately ahead" of analysts' expectations of £548m. However, that is still well below last year's figure of £681m.
'Still challenging'
"Both volume and transactions grew as the decline in average basket spend in supermarkets continued to stabilise," said chief executive Mike Coupe."Both volume and transactions grew as the decline in average basket spend in supermarkets continued to stabilise," said chief executive Mike Coupe.
"Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy.""Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy."
Part of the strategy involves having fewer special offers and instead having lower regular prices.Part of the strategy involves having fewer special offers and instead having lower regular prices.
The retailer cited particular progress on improving the taste and texture of its juice ranges and the ripeness and quality of its avocados.The retailer cited particular progress on improving the taste and texture of its juice ranges and the ripeness and quality of its avocados.
Sainsbury's recently announced a 4% pay rise for its staff, which came into effect on 30 August.Sainsbury's recently announced a 4% pay rise for its staff, which came into effect on 30 August.
Analysis by Kamal Ahmed, business editor, BBC News Analysis: Kamal Ahmed, BBC business editor
Sainsbury's chief executive Mike Coupe might not exactly be cracking open the champagne this morning (even if it is on £14 special offer at his supermarket).Sainsbury's chief executive Mike Coupe might not exactly be cracking open the champagne this morning (even if it is on £14 special offer at his supermarket).
But the fact he has been bold enough to suggest that profits might be slightly ahead of expectations in this morning's interim results is significant - it's unusual for Sainsbury's to say anything about profits in a trading update.But the fact he has been bold enough to suggest that profits might be slightly ahead of expectations in this morning's interim results is significant - it's unusual for Sainsbury's to say anything about profits in a trading update.
The main reason is that although like-for-like sales (a measure of cash going through the tills) are still down, the decline is slowing and the actual volume of food being bought by each customer is up.The main reason is that although like-for-like sales (a measure of cash going through the tills) are still down, the decline is slowing and the actual volume of food being bought by each customer is up.
And fewer promotions mean there are fewer "demand surges" for products, making supply chain management (the boring but vital part of the business) more efficient and cheaper.And fewer promotions mean there are fewer "demand surges" for products, making supply chain management (the boring but vital part of the business) more efficient and cheaper.
Half year results are in six weeks. Profits are likely to be down. But probably not by as much as initially feared.Half year results are in six weeks. Profits are likely to be down. But probably not by as much as initially feared.