This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.theguardian.com/business/2015/jan/07/sainsburys-christmas-trading-sales-fall-supermarket

The article has changed 4 times. There is an RSS feed of changes available.

Version 2 Version 3
Sainsbury’s enjoys better Christmas than expected despite sales fall Sainsbury’s enjoys better Christmas than expected despite sales fall
(about 11 hours later)
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 has suffered its worst Christmas in a decade with sales sliding by 1.7% – although the decline was smaller than the City had expected.
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, the chief executive, warned the year ahead would be challenging 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. 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.
“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. Coupe said 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. The volume of groceries sold at Sainsbury’s remained level with 2013.
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. “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 that also included transport costs and phones.
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. The chief executive said the next three months would be “challenging with food price deflation likely to continue” and underlying sales growth at Sainsbury’s was likely to fall to about 2.1% in the first quarter of 2015.
“Whatever happens we will be matching our competitors toe-to-toe and we believe we have the financial capacity to do that,” he said. Coupe said the retailer would respond to any action by rivals such as Tesco, which is widely expected to announce more 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.”
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.” The retailer has promised to invest £150m in price cuts this year, and began that campaign with reductions on 700 items this week.
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.” 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. Clive Black at Shore Capital said: “If Tesco does get its act together, then Sainsbury’s may be particularly vulnerable.”
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. Bryan Roberts at Kantar Retail said: “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. This year could be a challenge: lacking Tesco’s buying power and Asda’s efficiency, Sainsbury’s margins are set to be under further pressure.”
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. Coupe suggested Sainsbury’s was likely to have taken market share over Christmas with consumers shopping around for bargains, wasting less and using leftovers to save cash.
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. “Companies like ourselves, which tend to represent quality, will broadly speaking have done better,” he said.
The retailer beat expectations as sales of its premium Taste the Difference label grew by 5% year on year, led by prosecco, up 30%. Sales of turkeys rose 8% while 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 3% rise in underlying sales – stripping out the impact of new store openings. The Sainsbury’s Local chain took £8m on Christmas Eve alone, the chain’s biggest-ever sales day.
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. 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.
Asked if Sainsbury’s and the other major grocers were now fighting back against the discounters, whose pace of growth has been gradually slowing in recent months, Coupe said: “I suspect we will see some form of equilibrium in the next 12 to 24 months. It is still going to be extremely challenging and I am not in a position to call the turn, but I do think that in the next period of time there will be a change in the market dynamic.”