Sainsbury report slow sales in first quarter

Thu, Jun 14, 2012, 01:00

J SAINSBURY, the UK’s third- largest supermarket company, said sales growth slowed in the first quarter as a soggy start to the summer led to fewer bank holiday barbecues and forecast no let-up in competition.

Revenue at stores open at least a year rose 1.4 per cent in the 12 weeks ended June 9th, excluding gasoline, the London-based retailer said in a statement.

Britain had the wettest April since at least 1910, and some forecasters predict rainfall in June may eclipse 2007’s record, weighing on sales of food and drinks for outdoor events over the five bank holidays in the quarter.

Sainsbury’s sales growth was helped by purchases of party food as Britons celebrated Queen Elizabeth II’s Diamond Jubilee and was counter to a decline reported this week by market leader Tesco.

Tesco’s reporting period ended before the four-day jubilee holiday. Sainsbury fell as much as 2.9 per cent in London trading and was down 2.6 per cent at 283.5 pence at 10:09 a.m. The stock has fallen 6.4 per cent this year, while Tesco has slid 25 per cent.

Sainsbury CEO Justin King expects the “tough and challenging market to remain competitive,” he said on a conference call with journalists. The biggest area of promotional activity among grocers is multi-buy offers, such as buy-one-get-one-free, which account for about 40 per cent of goods sold, King said.

The retailer doesnt envisage any slowdown in that rate of promotions, and will continue to offer its own coupons at the checkout as part of its Brand Match campaign, which promises to be cheaper than competitors or shoppers receive a voucher with the difference. Tesco, which has started offering more money-off vouchers, said this week there was a “significant amount” of coupon activity, though it wasn’t a long-term solution.

Sainsbury’s share of UK grocery spending held steady at 16.5 per cent in the 12 weeks ended May 13th compared with the same period a year earlier. While Tesco’s share fell to a seven-year low this year, Sainsbury has gained shoppers with initiatives such as Brand Match. The retailer said it had its strongest week of clothing sales in the first quarter, helped by its Gok for Tu range. Online sales increased 20 per cent. – (Bloomberg)