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| Version 2 | Version 3 |
|---|---|
| Sainsbury's upgrades profit forecast | Sainsbury's upgrades profit forecast |
| (35 minutes later) | |
| Shares in Sainsbury's have jumped after it said full-year profits were set to be better than expected. | 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. | 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%. |
| Sainsbury's 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". |
| 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. | 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' | '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: Kamal Ahmed, BBC business editor | 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. |
| In common with the rest of the big supermarket chains, Sainsbury's has been struggling with competition from the discount retailers such as Aldi and Lidl. | |
| Analysts at Bernstein Research suggested that the big rise in the shares was due to the more upbeat tone in the statement. | |
| "The results represent a change of tone for Sainsbury's," they said. | |
| "It has tried to take a cautious message up to now, that it will go 'toe to toe' with whatever price investment anyone else makes." | |
| "That it is talking up guidance is now showing they are more confident in their strategic position." | |
| Sainsbury's also announced it had opened 27 convenience stores during the quarter and that clothing sales had been up nearly 13%. |