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Sainsbury’s 1.4% Q1 sales growth ahead of market

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Major UK supermarket chain Sainsbury’s has today reported a robust 3.6 per cent rise in total sales for its first quarter trading period.

On a like-for-like basis the retailer’s trading increased 1.4 per cent year-on-year in the 12 weeks ending June 9th 2012, which represents a decline in sales growth compared to the previous quarter but puts the business ahead of its competitors in the grocer market.

The UK’s largest supermarket retailer Tesco reported a 1.4 per cent decline in LFL trading for its first quarter period earlier this week, and whilst underlying trading at Sainsbury’s was flattered by its programme of store expansions these results remain positive given subdued consumer spending.

CEO of Sainsbury’s Justin King commented: “We have delivered good sales growth in the quarter, in line with our expectations, helping our customers to manage both their weekly budgets, and to celebrate special occasions. Over the quarter we maintained our outperformance of the market.

“Customers continued the habit of savvy shopping to save money in order to be able to treat themselves on special occasions, shown by strong sales in the lead up to the Jubilee celebrations.”

During the quarter the firm opened 21 new convenience stores, extended one larger supermarket and refurbished eight more, and once sales derived from extended space at existing stores is removed from LFLs, underlying trading grew just 0.6 per cent.

Matt Piner, Lead Consultant at analyst firm Conlumino, points out that sales growth at Sainsbury’s is much reduced from levels seen just a couple of years ago, but given the increasing competition in the grocery market and falling food inflation, the business has produced a “decent performance”.

“Sainsbury’s focus on quality on a budget has once again helped it tap into the mood of a nation. With a number of bank holidays and the jubilee falling into the period, consumers were in the mood to celebrate but without blowing the budget, and Sainsbury’s has positioned itself brilliantly to capture this spend,” Piner said.

“By continuing to improve stores and products and developing its fledgling non-food, online and convenience offers, Sainsbury’s is well placed to keep eating into Tesco’s market share.”

King remains confident that Sainsbury’s will continue to outperform the market thanks to the success of its own labels, its Brand Match promotion, and the strengthening of its non-core offer.

Convenience sales rose 16 per cent compared to Q1 last year and its non-food trading is increasing at a greater rate than its mainline food offering thanks to increased investment.

King added: “We are gaining market share in our core general merchandise and clothing categories. Non-food continues to grow faster than food, and the quarter saw the strongest ever sales week on clothing.

“In particular, the fourth collection of our Gok for TU womenswear looks set to be our most successful to date.”

Published on Wednesday 13 June by Editorial Assistant

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