Sainsbury’s hit by first sales fall in nine years
SAINSBURY’S nine-year run of like-for-like sales growth came to a halt in the fourth quarter as sluggish market growth and fierce competition from discounters finally caught up with the grocer.
Like-for-like sales excluding fuel tumbled 3.1 per cent in the 10 weeks to 15 March, ending 36 consecutive quarters of sales growth on chief executive Justin King’s watch.
The outgoing boss blamed the weak performance on the slowdown in the grocery market, the later timing of Easter and tough comparatives on last year when Sainsbury’s reaped the rewards of not being involved in the horsemeat scandal.
But the bigger-than-expected decline also highlighted the rising pressure from hard discounters, which has prompted other major grocers Tesco, Asda and Morrisons to respond in recent weeks by slashing prices.
King played down the threat posed by the bargain retailers, pointing out that their market share is lower today than it was in the early 1990s,
He also dismissed fears of a price war, arguing that price cuts were “part of the cut and thrust of this market” and that the sums being invested by rivals were equal to what they already invested into price each year.
The supermarket stuck to its full-year forecasts and said it was confident that its own brand offer, loyalty card and network of convenience stores will help it outperform its peers.
Three key numbers from the quarterly results
1 MINUS 3.1 PER CENT
Like-for-like sales fell 3.1 per cent from a 3.6 rise per cent last year
2 17 PER CENT
Despite the decline, Justin King (right) said that it had held onto its 17 per cent market share
3. SIX PER CENT
Online sales growth slowed to six per cent from 10 per cent in its third, Christmas quarter.