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Sainsbury's total sales up 4.4% in Q2

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Supermarket chain Sainsbury’s saw total sales jump 4.4 per cent excluding fuel over its second quarter, it has been announced today.

In the 16 weeks to September 29th 2012, like-for-like (LFL) sales rose 1.9 per cent while, over its first half, total and LFL sales increased 4.1 per cent and 1.7 per cent respectively.

Sales were boosted by the grocer’s official sponsorship of the Paralympic Games, which saw it increase its media spend in the seven weeks ending September 10th 2012 by 98 per cent year-on-year to £3.8 million.

Sainsbury’s CEO Justin King welcomed the strong results, commenting: “This has been a unique and special summer, during which we have delivered another quarter of good sales, outperforming the market in what remains a challenging retail environment.

“The quarter began with the period immediately following the Jubilee celebrations, and was characterised by unseasonal weather. The quarter ended with the Olympic and Paralympic Games, which united and inspired the nation.

“We were delighted to play our part in helping customers celebrate this summer like no other, and are particularly proud of Sainsbury’s association with the Paralympic Games.”

Non-food growth is now three times that of food the supermarket announced as fashion proved popular with customers and the quarter saw Sainsbury’s report its biggest ever back-to-school season.

Over the first half, the grocer opened 49 convenience stores across the UK and remains on target to open one or two per week throughout the year.

Over the quarter, five supermarkets were opened, 28 convenience stores and two extensions which added a total of 267,000 sq ft to the retailer’s portfolio while sales across its online channel are also performing well, with growth of over 20 per cent year-on-year.

King pointed out that the retailer is approaching the first anniversary of its Brand Match promise, following the tenth anniversary of its partnership with Nectar which has allowed the chain to reward customers while offering targeted promotions.

King believes that the Brand Match scheme, which was extended last year and offers customers coupons should their basket be cheaper at Tesco or Asda, reinforces the competitiveness of its pricing.

However, Sainsbury’s was today ordered to change its Brand Match campaign by advertising watchdog the Advertising Standards Authority (ASA), which received a number of complaints, including one from rival Tesco, which claimed that the supermarket’s advertising campaign was misleading.

Some complaints were upheld and the ASA ruled that the ads must not appear again their current form, stating: “We told Sainsbury’s to ensure future ads did not imply consumers would not pay more, or would save money, if that was not the case.

“We also told them to ensure all significant conditions of promotions were made clear in future.”

Sainsbury’s said that it had already altered the ad and King feels that its commitment to value remains a primary focus of its offering.

He concluded: “We expect the challenging economic backdrop to persist, but by helping our customers to ‘Live Well For Less’ through competitive pricing, targeted promotions, quality own label products, and outstanding customer service, we are positioned to perform well coming into the important Christmas period.”

Despite this upset, analysts believe that Sainsbury’s proposition remains strong and is to be applauded at a time when rival Tesco has seen half-year profits plummet 11.6 per cent.

Joseph Robinson, Senior Consultant at analyst firm Conlumino, said of the results: “Sainsburys’ even more positive than anticipated update, represents a continued outperformance of the wider UK food and grocery market, with its keen focus on quality on a budget appealing strongly to current consumer sentiment.

“The grocer’s investment in Paralympics sponsorship also left it well placed to piggy back on the success of the British sporting summer.

“A proactive strengthening of its value credentials has underpinned Sainsbury’s widening appeal. To this end, brand match is proving popular, while it also continues to leverage Nectar for more targeted promotions.

“Indeed, since the outset of the downturn, Sainsburys’ utilisation of promotional activity has been skilful; with campaigns such as feed your family and brand match representing targeted, considered and sustainable investment.”

Published on Wednesday 03 October by Editorial Assistant

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