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| Sainsbury’s enjoys better Christmas than expected despite sales fall | Sainsbury’s enjoys better Christmas than expected despite sales fall |
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| Sainsbury’s enjoyed a better than expected performance over Christmas but still saw its sales slide by 1.7%, marking its worst festive performance in a decade. | Sainsbury’s enjoyed a better than expected performance over Christmas but still saw its sales slide by 1.7%, marking its worst festive performance in a decade. |
| Mike Coupe, chief executive, warned of a challenging year ahead as he revealed the supermarket group’s fourth consecutive quarter of falling sales. It was, however, an improvement on the previous quarter’s 2.8% drop. | Mike Coupe, chief executive, warned of a challenging year ahead as he revealed the supermarket group’s fourth consecutive quarter of falling sales. It was, however, an improvement on the previous quarter’s 2.8% drop. |
| Coupe warned there was no sign of a pick-up in the grocery market despite the falling cost of fuel, which was handing families up to £10 extra a week to spend. | Coupe warned there was no sign of a pick-up in the grocery market despite the falling cost of fuel, which was handing families up to £10 extra a week to spend. |
| “Customers have a little bit more money in their back pocket but they are choosing to spend that on other items,” he said. Coupe suggested new cars were among a list of more pressing or tempting alternatives such as transport costs and phones. | “Customers have a little bit more money in their back pocket but they are choosing to spend that on other items,” he said. Coupe suggested new cars were among a list of more pressing or tempting alternatives such as transport costs and phones. |
| The chief executive said the next three months would be “challenging with food price deflation likely to continue”, warning that underlying sales growth at Sainsbury’s was likely to fall to about 2.1% in the first quarter of 2015. | The chief executive said the next three months would be “challenging with food price deflation likely to continue”, warning that underlying sales growth at Sainsbury’s was likely to fall to about 2.1% in the first quarter of 2015. |
| Over Christmas, food prices at Sainsbury’s were down by 0.5-1%, accounting for about half the retailer’s fall in sales for the quarter ending 3 January. Coupe said the retailer would respond to any action by rivals such as Tesco, which is widely expected to announce price cuts on Thursday. | |
| “Whatever happens we will be matching our competitors toe-to-toe and we believe we have the financial capacity to do that,” he said. | |
| But analysts expressed concern that Sainsbury’s would face increasing pressure if Tesco cuts prices, with some predicting the UK’s biggest retailer will invest £900m this week. Clive Black, at Shore Capital, said: “If Tesco does get its act together, then Sainsbury may be particularly vulnerable.” | But analysts expressed concern that Sainsbury’s would face increasing pressure if Tesco cuts prices, with some predicting the UK’s biggest retailer will invest £900m this week. Clive Black, at Shore Capital, said: “If Tesco does get its act together, then Sainsbury may be particularly vulnerable.” |
| Bryan Roberts, at Kantar Retail, agreed: “Sainsbury’s performance, against a deflationary zero growth backdrop, is by no means a horror show and is likely to position Sainsbury’s as the second-best performer [after Asda] among the big four over the festive trading period. 2015 could be a challenge: lacking Tesco’s buying power and Asda’s efficiency, Sainsbury’s margins are set to be under further pressure.” | |
| Coupe suggested Sainsbury’s was likely to have taken market share over Christmas amid a difficult market in which consumers are shopping around for bargains, wasting less and using up their leftovers to save cash. “Companies like ourselves, which tend to represent quality, will broadly speaking have done better,” he said. | Coupe suggested Sainsbury’s was likely to have taken market share over Christmas amid a difficult market in which consumers are shopping around for bargains, wasting less and using up their leftovers to save cash. “Companies like ourselves, which tend to represent quality, will broadly speaking have done better,” he said. |
| Sales of the grocer’s premium own-label range, Taste the Difference, grew by 5% year on year, led by prosecco, up 30%. Sales of turkeys rose 8%; clothing sales were up 10% as the retailer sold almost twice as many Christmas jumpers as it did in 2013. | |
| In a reflection of changing shopping habits, Sainsbury’s convenience stores experienced a 16% rise in sales, taking £8m on Christmas Eve alone, the biggest-ever sales day for the rapidly growing chain. | |
| But the company admitted that its online business was likely to have performed less well than rivals, with sales up by just 6%. | But the company admitted that its online business was likely to have performed less well than rivals, with sales up by just 6%. |
| The group’s finance director, John Rogers, insisted the lacklustre growth was not caused by delivery problems experienced by about 500 shoppers in the last few days before Christmas, but because Sainsbury’s had avoided offering costly vouchers and discounts. | The group’s finance director, John Rogers, insisted the lacklustre growth was not caused by delivery problems experienced by about 500 shoppers in the last few days before Christmas, but because Sainsbury’s had avoided offering costly vouchers and discounts. |
| Sainsbury’s is the first of the large supermarket chains to reveal its Christmas trading, as the sector experiences one of its toughest festive seasons amid growing competition from discounters Aldi and Lidl and upmarket grocers Waitrose and Marks and Spencer. | Sainsbury’s is the first of the large supermarket chains to reveal its Christmas trading, as the sector experiences one of its toughest festive seasons amid growing competition from discounters Aldi and Lidl and upmarket grocers Waitrose and Marks and Spencer. |
| On Tuesday, Waitrose revealed a 2.8% rise in sales at established stores in the five weeks to 3 January. The discounters are expected to have enjoyed double-digit growth. | On Tuesday, Waitrose revealed a 2.8% rise in sales at established stores in the five weeks to 3 January. The discounters are expected to have enjoyed double-digit growth. |