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Sainsbury’s sales fall 0.8% in three months amid food price deflation Sainsbury’s sales fall 0.8% in three months amid food price deflation
(about 1 hour later)
Sainsbury’s has reported a slide in sales in the last three months, as it cut back on promotions, and warned that the market remained tough.Sainsbury’s has reported a slide in sales in the last three months, as it cut back on promotions, and warned that the market remained tough.
Like-for-like sales excluding fuel fell 0.8% in the three months to 4 June, the company’s first quarter, following 0.1% growth in the previous quarter. But the drop was not as bad as the 1.4% decline expected by analysts. Total retail sales were up 0.3% excluding fuel.Like-for-like sales excluding fuel fell 0.8% in the three months to 4 June, the company’s first quarter, following 0.1% growth in the previous quarter. But the drop was not as bad as the 1.4% decline expected by analysts. Total retail sales were up 0.3% excluding fuel.
Chief executive Mike Coupe said: “Market conditions remain challenging. Food price deflation continues to impact our sales and pressures on pricing mean the market will remain competitive for the foreseeable future.” He said deflation – a period of falling prices – would continue into the autumn, but it has been easing.Chief executive Mike Coupe said: “Market conditions remain challenging. Food price deflation continues to impact our sales and pressures on pricing mean the market will remain competitive for the foreseeable future.” He said deflation – a period of falling prices – would continue into the autumn, but it has been easing.
He said the grocer had been affected by the timing of Easter and the May bank holiday compared with last year, and the “relatively inclement April versus a relatively nice April last year”. He said the grocer had been affected by the different timing of Easter and the May bank holiday compared with last year, and the “relatively inclement April versus a relatively nice April last year”.
Coupe added: “There’s no doubt that there is a lot of vouchering going on in the marketplace. We are not chasing volume for the sake of chasing volume.” He added: “We are not chasing volume for the sake of chasing volume. There’s no doubt that there is a lot of vouchering going on in the marketplace.”
Sainsbury’s has been cutting back on promotions and is reinvesting “every penny” saved in lowering regular prices of everyday products such as cheese, vegetables and chicken. It scrapped Brand Match in late April – under which it gave vouchers to shoppers if they could have bought branded goods cheaper at Asda – and is phasing out the vast majority of multi-buy promotions by August. The supermarket price war in recent years has seen the big four trying to defend their market share against the German discount chains Aldi and Lidl, as well as new competitors such as Amazon, which recently launched a food delivery service in the UK.
Less than a quarter (23%) of Sainsbury’s sales are now on promotion, compared with a mid-30% number for the rest of the market, it said. Chief financial officer John Rogers said fewer promotions meant less volatility in the supply chain, and less food waste. Sainsbury’s, Britain’s second-biggest grocer after Tesco, has been cutting back on promotions and is reinvesting “every penny” saved in lowering regular prices of everyday products such as cheese, vegetables and chicken. It scrapped Brand Match in late April – under which it gave vouchers to shoppers if they could have bought branded goods cheaper at Asda – and is phasing out most of its multi-buy promotions by August.
The Competition and Markets Authority is scrutinising the company’s £1.4bn deal to buy Argos owner Home Retail, which was agreed in April. Coupe said he saw no reason to believe that the investigation would go beyond a preliminary probe of 40 working days. Sainsbury’s expects the deal to be completed in the third quarter. Coupe said customers preferred simplicity and clarity – and “don’t want a maths degree to go shopping.”
The trading update showed that clothing sales grew by nearly 5%, with Admiral menswear performing well. Sainsbury’s football-inspired range is proving popular ahead of the Euro 2016 football tournament that starts on Friday. But Coupe said good weather over the summer was more important than the event. Less than a quarter (23%) of Sainsbury’s sales are now on promotion, compared with a mid-30% number for the rest of the market. Chief financial officer John Rogers said fewer promotions meant less volatility in the supply chain, and less food waste.
The Competition and Markets Authority is scrutinising the company’s £1.4bn deal to buy Argos owner Home Retail, which was agreed in April. Coupe said he saw no reason to believe that the investigation would go beyond a preliminary probe of 40 working days. Sainsbury’s expects the deal, which will allow it to diversify away from food, to be completed in the third quarter.
The trading update showed that clothing sales grew by nearly 5%. Sainsbury’s football-inspired Admiral menswear range is proving popular ahead of the Euro 2016 football tournament that starts on Friday. But Coupe said good weather over the summer was more important than the event.
Online sales rose more than 8%, broadly in line with previous growth, after Sainsbury’s launched a new online app.Online sales rose more than 8%, broadly in line with previous growth, after Sainsbury’s launched a new online app.
General merchandise grew by more than 5%. In March, Sainsbury’s started selling vinyl records again after 25 years and claims to be the biggest vinyl retailer on the high street, with a near 10% market share.General merchandise grew by more than 5%. In March, Sainsbury’s started selling vinyl records again after 25 years and claims to be the biggest vinyl retailer on the high street, with a near 10% market share.
Coupe joked that vinyl had taken over from adult colouring as the latest craze. Rumours by Fleetwood Mac along with David Bowie, Beatles and Nirvana albums are among the top sellers.Coupe joked that vinyl had taken over from adult colouring as the latest craze. Rumours by Fleetwood Mac along with David Bowie, Beatles and Nirvana albums are among the top sellers.
David Alexander, senior analyst at consultancy Verdict Retail, said: “Mike Coupe’s claim that Sainsbury’s continues to outperform its major peers begins to look a little dubious … Sainsbury’s and Tesco have adopted similar approaches in their fightback, reducing complex promotional activity in favour of more stable low prices, aligning themselves closely with values that portray a more caring image, such as reducing waste and improving instore service standards.”
But, he added: “The development of its convenience network ... has left Sainsbury’s in a position of strength, while its reputation for the quality of its products should allow it to hold its own as the Tesco fightback continues in earnest.”