Sainsbury’s says fightback plan paying off
SAINSBURY’S chief executive Mike Coupe said the supermarket chain was seeing “some signs of recovery” after launching a £150m fightback plan last year, despite underlying sales falling for the fifth quarter in a row.
Like-for-like sales, excluding fuel, fell by 1.9 per cent in the 10 weeks to 14 March, its final quarter, with sales for the year falling by the same amount – its first annual decline in 11 years.
The retailer is slashing costs, dividends and new store openings to fund an extra £150m in lower prices as part of a strategy set out in November.
Coupe insisted these measures were already paying off with an average volume growth of three per cent on the 1,100 products where it has cut prices.
“We believe that at least part of our underlying volume growth is a reflection of these investments. It’s difficult to unpick these things, but you could extrapolate that you are seeing a return to market growth. But it’s still too early and we are still cautious given the market backdrop,” he said.
Coupe also hinted that the price war embarked on by Sainsbury’s, Tesco, Asda and Morrisons could be having an impact on the discounters Aldi and Lidl, which have seen growth slow over the past few months. “There is a little bit of rebalancing in the market, but let’s not get carried away.”
Food deflation fell to 2.5 per cent in the fourth quarter and Sainsbury’s warned that it was likely to stay at this level for the rest of the year. “There is a very intense competitive dynamic right now and I wouldn’t rule out that it will get more intense,” said Coupe.