Sainsbury outshines Tesco with quarterly sales rise

British supermarket chain Sainsbury met forecasts for underlying sales growth in its first quarter, outperforming major rivals with an outcome driven by growth online and in convenience stores.

“We are well positioned to continue to outperform the market,” the firm said this morning, though it cautioned it expected a tough economic environment to persist through 2013.

The group, which trails Tesco and Asda by annual revenue, said sales at stores open over a year rose 0.8 per cent, excluding fuel, in the 12 weeks to June 8.

That was a 34th consecutive quarter of underlying sales growth and compared to analysts’ forecasts of a rise of 0.6 to 2 per cent.

Sainsbury’s performance compared to a first-quarter like-for-like sales fall of 1 percent at Tesco, a 1.8 per cent decline at Morrisons, and a 1.3 per cent rise at Asda, albeit for different trading periods.

However, it did represent a slowdown from growth of 3.6 per cent in the fourth quarter of the 2012-13 year.

That slowdown mainly reflected comparisons with an extra bank holiday last year to celebrate the Queen’s diamond jubilee.

Britain’s supermarkets, despite their focus on essential goods, have not been immune to the economic downturn and are battling intensely for market share.

Online and smaller local convenience stores are the two fastest growing areas in the industry as shopping habits change. Consumers are increasingly using the internet to shop and high fuel prices are discouraging trips to town centres and out-of-town malls.

Sainsbury’s said online grocery sales rose 16 per cent in the first quarter, while convenience store sales increased 20 per cent.

The group, whose current grocery market share is at a decade high of 16.8 per cent, just behind Asda, has also benefited from the success of a “Brand Match” pricing initiative, growth of own-brand sales and a big push into non-food areas such as kitchen electricals and cookware.

And unlike Tesco and Asda it has not been implicated in the horsemeat scandal, with none of its products testing positive for equine DNA.

Sainsbury’s total first quarter sales rose 3.3 per cent, excluding fuel.

Last month the firm forecast like-for-like sales growth for the 2013-14 year of 1 percent to 1.5 per cent.

Reuters