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| Sainsbury’s cuts annual sales forecast and reviews dividend | |
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| Sainsbury’s has cut its forecast for annual sales and is reviewing its dividend after the supermarket group was forced to slash prices in the toughest grocery market for decades. | Sainsbury’s has cut its forecast for annual sales and is reviewing its dividend after the supermarket group was forced to slash prices in the toughest grocery market for decades. |
| The revision announced by the company’s new chief executive, Mike Coupe, means almost a decade of rising annual sales at Sainsbury’s will come to an end. | The revision announced by the company’s new chief executive, Mike Coupe, means almost a decade of rising annual sales at Sainsbury’s will come to an end. |
| In a trading update, the group said sales fell more quickly in the second quarter of the financial year and that they would not pick up in the second half. | In a trading update, the group said sales fell more quickly in the second quarter of the financial year and that they would not pick up in the second half. |
| Sales at stores open for a year or more dropped by 2.8% in the 16 weeks to 27 September, excluding fuel, compared with a 1.1% fall in the previous three months. Sainsbury’s said it expected second-half like-for-like sales to be similar. | Sales at stores open for a year or more dropped by 2.8% in the 16 weeks to 27 September, excluding fuel, compared with a 1.1% fall in the previous three months. Sainsbury’s said it expected second-half like-for-like sales to be similar. |
| The supermarket had previously predicted that like-for-like sales would pick up in the second half, and that they would rise slightly for the full year. The revised guidance means annual sales will now fall. | The supermarket had previously predicted that like-for-like sales would pick up in the second half, and that they would rise slightly for the full year. The revised guidance means annual sales will now fall. |
| Sainsbury’s shares fell 3.5% to 243p, their lowest since the depths of the financial crisis in October 2008. The gloomy updated dragged rivals Morrisons down 4% and Tesco down 2.7%. | Sainsbury’s shares fell 3.5% to 243p, their lowest since the depths of the financial crisis in October 2008. The gloomy updated dragged rivals Morrisons down 4% and Tesco down 2.7%. |
| In his first presentation as chief executive, Coupe said the grocery market had changed more quickly in his 84 days in the CEO’s chair than he had seen in his 30 years in the industry. Shoppers are making smaller purchases, prices are falling and people are spending any money they save on eating out, he said. | In his first presentation as chief executive, Coupe said the grocery market had changed more quickly in his 84 days in the CEO’s chair than he had seen in his 30 years in the industry. Shoppers are making smaller purchases, prices are falling and people are spending any money they save on eating out, he said. |
| Coupe has launched a review of Sainsbury’s entire business, including its dividend policy, and will update investors in November. | Coupe has launched a review of Sainsbury’s entire business, including its dividend policy, and will update investors in November. |
| “We are in a very dynamic market at the moment and we are looking at all aspects of our business. We will leave no stone unturned,” Coupe said. “The rate of change going on in the marketplace is something we will be thinking very carefully about over the next six weeks.” | “We are in a very dynamic market at the moment and we are looking at all aspects of our business. We will leave no stone unturned,” Coupe said. “The rate of change going on in the marketplace is something we will be thinking very carefully about over the next six weeks.” |
| Sainsbury’s finance director, John Rogers, said: “If we are doing a full-scale strategic review with no stone unturned you would expect the dividend to be part of that full-scale review.” Some analysts have said all three listed supermarkets might have to cut their dividends to take account of falling profitability. | Sainsbury’s finance director, John Rogers, said: “If we are doing a full-scale strategic review with no stone unturned you would expect the dividend to be part of that full-scale review.” Some analysts have said all three listed supermarkets might have to cut their dividends to take account of falling profitability. |
| The sense of crisis in the sector increased last week when Tesco revealed it had overstated its expected first-half profits by £250m. Sainsbury’s bigger rival blamed incorrect accounting of commercial revenues from suppliers for most of the accounting shambles, which the Financial Conduct Authority is investigating. | The sense of crisis in the sector increased last week when Tesco revealed it had overstated its expected first-half profits by £250m. Sainsbury’s bigger rival blamed incorrect accounting of commercial revenues from suppliers for most of the accounting shambles, which the Financial Conduct Authority is investigating. |
| Coupe, Sainsbury’s commercial director until becoming chief executive, and Rogers said they were “100% confident” that Sainsbury’s had accounted for promotional income correctly. Rogers said there was “a gross misrepresentation” that retailers had lots of leeway about how and when to record the revenues and that the accounting rules were clearly defined. | Coupe, Sainsbury’s commercial director until becoming chief executive, and Rogers said they were “100% confident” that Sainsbury’s had accounted for promotional income correctly. Rogers said there was “a gross misrepresentation” that retailers had lots of leeway about how and when to record the revenues and that the accounting rules were clearly defined. |
| Sainsbury’s has withstood the onslaught from German discounters Aldi and Lidl more successfully than its rivals Tesco and Morrisons by treading a fine line between price and quality, but with the wider grocery market stagnant and cash-strapped consumers searching for bargains, it has been forced to join the price war in the sector. | Sainsbury’s has withstood the onslaught from German discounters Aldi and Lidl more successfully than its rivals Tesco and Morrisons by treading a fine line between price and quality, but with the wider grocery market stagnant and cash-strapped consumers searching for bargains, it has been forced to join the price war in the sector. |
| Coupe said he had cut basic prices on thousands of food items and would do away with confusing promotions. He has also simplified Sainsbury’s pledge to match Asda prices even when its rival, which shoppers view as the cheapest supermarket, has a promotion. | Coupe said he had cut basic prices on thousands of food items and would do away with confusing promotions. He has also simplified Sainsbury’s pledge to match Asda prices even when its rival, which shoppers view as the cheapest supermarket, has a promotion. |
| Coupe, who took over in July from his celebrated predeccessor, Justin King, refused to comment on whether price competition was a skirmish, as King had described it. City analysts had expected Sainsbury’s to be hit by the sector’s malaise and had forecast like-for-like sales down between 3% and 4%. | Coupe, who took over in July from his celebrated predeccessor, Justin King, refused to comment on whether price competition was a skirmish, as King had described it. City analysts had expected Sainsbury’s to be hit by the sector’s malaise and had forecast like-for-like sales down between 3% and 4%. |