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Sainsbury's sales below targets Sainsbury's sales below targets
(about 1 hour later)
Sainsbury's has become the second supermarket group in two days to report sales below stock market expectations.Sainsbury's has become the second supermarket group in two days to report sales below stock market expectations.
Adding to signs of a slowdown in the sector, Sainsbury's said like-for-like sales excluding petrol rose 5.1% in the three months to 16 June.Adding to signs of a slowdown in the sector, Sainsbury's said like-for-like sales excluding petrol rose 5.1% in the three months to 16 June.
Analysts had expected a rise of 5.4%, although Sainsbury's latest sales figure does represent its tenth quarter of continuous growth.Analysts had expected a rise of 5.4%, although Sainsbury's latest sales figure does represent its tenth quarter of continuous growth.
It comes a day after Tesco reported its slowest sales rise in a year.It comes a day after Tesco reported its slowest sales rise in a year.
Slowing down?Slowing down?
Tesco, the UK's largest retailer, said it was facing a "tougher year" because of higher interest rates, adding its UK like-for-like sales excluding petrol rose 4.7% in the 13 weeks to 26 May.Tesco, the UK's largest retailer, said it was facing a "tougher year" because of higher interest rates, adding its UK like-for-like sales excluding petrol rose 4.7% in the 13 weeks to 26 May.
Sainsbury also said that the UK trading environment was "competitive", adding that it had cut prices to help boost demand.Sainsbury also said that the UK trading environment was "competitive", adding that it had cut prices to help boost demand.
"It does look like things are starting to slow down," said Seymour Pierce analyst Andrew Wade."It does look like things are starting to slow down," said Seymour Pierce analyst Andrew Wade.
Despite the concerns, Sainsbury has managed to keep sales growing as it continues to restructure its business.Despite the concerns, Sainsbury has managed to keep sales growing as it continues to restructure its business.
Sainsbury's said its ongoing rise in sales was helped by its efforts to improve stock levels and availability.Sainsbury's said its ongoing rise in sales was helped by its efforts to improve stock levels and availability.
They were also lifted by the popularity of its organic range.They were also lifted by the popularity of its organic range.
"This is particularly pleasing as the quarter included some very tough comparatives in the final few weeks driven by the football World Cup and the very warm weather last June," said Mr King."This is particularly pleasing as the quarter included some very tough comparatives in the final few weeks driven by the football World Cup and the very warm weather last June," said Mr King.
Buying upBuying up
Sainsbury's trading update comes amid speculation that the Qatari royal family is contemplating a takeover.Sainsbury's trading update comes amid speculation that the Qatari royal family is contemplating a takeover.
Last week the family upped its stake in Sainsbury's from 17.6% to 25%, becoming the retailer's largest shareholder.Last week the family upped its stake in Sainsbury's from 17.6% to 25%, becoming the retailer's largest shareholder.
In April Sainsbury's saw off a £10.1bn takeover offer from a private equity consortium.In April Sainsbury's saw off a £10.1bn takeover offer from a private equity consortium.
The group, led by CVC Partners, dropped its 600 pence-a-share proposal after the founding Sainsbury family, which owns 18% of the firm, had opposed its plans.The group, led by CVC Partners, dropped its 600 pence-a-share proposal after the founding Sainsbury family, which owns 18% of the firm, had opposed its plans.
Sainsbury's has become a popular takeover target after it has successfully turned around its fortunes under chief executive Justin King.Sainsbury's has become a popular takeover target after it has successfully turned around its fortunes under chief executive Justin King.
Mr King launched a restructuring programme when he took over in 2004, which is due to come to an end in October this year.Mr King launched a restructuring programme when he took over in 2004, which is due to come to an end in October this year.
Sainsbury's shares added 1.5 pence, or 0.3%, to 582.5p in early trading in London.