Business

Sainsbury’s sales fighting back against Lidl and Aldi

Online grocery sales increased 8%, while sales at convenience stores were up 10%

Sainsbury’s and its major rivals are grappling with the rapid growth of German discounters. Photograph: PA Wire

Tue Jul 4 2017 - 08:36

Sainsbury’s, Britain’s second biggest supermarket group, saw its sales growth accelerate in its latest quarter, helped by inflation and a spate of warm weather, though it cautioned trading conditions remained tough.

Sainsbury's and its major rivals – market leader Tesco, Asda and Morrisons – are grappling with the rapid growth of German discounters Aldi and Lidl and having to deal with more expensive food imports due to the post-Brexit vote fall in the value of the pound.

“The market is competitive and we continue to manage cost price pressures closely,” chief executive Mike Coupe said.

“Our strategy is delivering and we are well placed to navigate the external environment.”

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Sainsbury’s said group retail like-for-like sales rose 2.3 per cent, excluding fuel, in the 16 weeks to July 1st, its fiscal first quarter.

Analysts’ forecast

That compares with analysts’ average forecast of a rise of 2 per cent and growth of 0.3 per cent in the previous quarter.

This was the first quarter following the Home Retail purchase for which the group did not issue separate like-for-like sales data for Sainsbury’s and Argos.

Sainsbury’s said total grocery sales rose 3 per cent, while transactions at the supermarket were up 1.9 per cent. General merchandise sales increased 1 per cent.

The group said online grocery sales increased 8 per cent, while sales at convenience stores were up 10 per cent.

Prior to Tuesday’s update analysts were on average forecasting a pre-tax profit of £572 million (€651 million) for 2017-18, down from £581 million in 2016-17. Such an outcome would represent a fourth straight year of profit decline.

Shares in Sainsbury’s, up 5 per cent over the last year, closed Monday at 249 pence, valuing the business at £5.5 billion (€6.2 billion).

– (Reuters)

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