The outlook for the rest of the financial year will “remain challenging” warned Sainsbury‘s, after posting a drop in like-for-like sales over the key Christmas trading period. This is the supermarket chain‘s first fall in Christmas sales in over a decade.
The Big Four grocer said sales across stores that had been open for at least a year fell 1.7% excluding fuel in the 14 weeks to 3 January with total sales dropping by 0.4%
The week before Christmas was a “record”, however, seeing 29.5m customer transactions.
Chief Executive at Sainsbury‘s Mike Coupe, said he expected like-for-like sales in the fourth quarter to resemble its first half performance due to “the uncertainty in the trading environment, food price deflation and price reductions”.
He said the sales figures highlight the trend of more frequent and local shopping, with its convenience business growing 16% in the quarter.
Christmas Eve marked Sainsbury‘s biggest trading day in its convenience stores, with sales totalling £8m.The third quarter was also its biggest Christmas for online sales, with the chain delivering 110,000 orders in the three days to 23 December.
The figures come a day after Sainsbury‘s announcement that it will slash the prices of 1,000 of its most popular products as part of a £150m programme announced in November.
Phil Dorrell, Director of the retail consultancy Retail Remedy, comments:
“These numbers were marginally better than expected, but still highlight the challenges facing Sainsbury‘s and the rest of the big four. Sainsbury‘s is under attack from all angles — from the discounters who are going from strength to strength, food price deflation, a wounded Tesco and a Morrisons that may finally be starting to halt its own sales freefall.
Like-for-like sales slump aside, there is a lot Sainsbury‘s does right. It has smaller stores than its competitors, a strong convenience business, a solid online proposition and some of the best own-label stats in the business. Taste the Difference is really starting to make a difference. If it concentrates on these qualities and sticks to the basics in the medium-term, it may well emerge in better shape than many expect.”
He continued:
“Sainsbury‘s has already made some concessions on price, with over 1000 basic lines being trimmed this week alone, so it clearly recognises the battle is currently in that area.
If Sainsbury‘s attempts to duke it out with the big boys, it could take one hell of a beating. Even though the Netto experiment is interesting, it‘s certainly no saviour yet. It can‘t afford to cut corners on quality, it‘s not in a position to make many workforce savings, and it‘s no Asda, so either the suppliers have got to play ball or margins are going to be squeezed.”
