UK's Sainsbury's sales dip in Christmas quarter

Figures show worse-than-expected fall in underlying sales in key period

Sainbury’s is the number two supermarket in Britain.  Photograph: Chris Ratcliffe/Bloomberg

Sainbury’s is the number two supermarket in Britain. Photograph: Chris Ratcliffe/Bloomberg

 

Sainsbury’s has blamed “cautious” consumer spending for falling sales over its festive quarter as its Argos business also suffered after cutting back on heavy discounts.

The supermarket giant – which plans to merge with rival Asda in a £12 billion (€13.3 billion) deal – saw like-for-like retail sales, including Argos and excluding fuel, fall 1.1 per cent in the 15 weeks to January 5th. Boss Mike Coupe joined rivals in confirming that Christmas “came late” this year as shoppers held off until the last minute, while they also traded down amid a general pull-back in spending as Brexit uncertainty weighs.

While grocery sales rose 0.4 per cent over the quarter, Sainsbury’s said this was offset by a 2.3 per cent drop in general merchandise and a 0.2 per cent decline for clothing.

General merchandise sales, including its Argos business, grew “strongly” over the key Christmas weeks, but this was not enough to boost the overall performance. Mr Coupe said: “Sales declined in the quarter due to cautious customer spending and our decision to reduce promotional activity across Black Friday.”

Cautious

He added that consumers have become “extremely cautious about what they spend their money on”, down-trading on their groceries and splashing out less on toys and electricals over Christmas.

The outlook for consumer spending and confidence remains “uncertain” going into 2019, he warned. The sales fall is worse than expected and comes in contrast to the 3.6 per cent rise reported by rival Morrisons on Tuesday for the nine weeks to January 6th, with retail sales up 0.6 per cent. It also marks a change in fortunes after Sainsbury’s enjoyed a 1 per cent sales rise in the previous quarter and saw festive sales lift 1.1 per cent a year ago.

Industry data on Tuesday pointed to a tough Christmas for Sainsbury’s, with Kantar Worldpanel saying the chain was the worst performer of the Big Four with its market share dropping to 16.2 per cent over the final quarter of 2018. Shares in Sainsbury’s initially slipped 1 per cent before recovering to stand nearly 2 per cent higher.

– PA