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Sainsbury’s optimistic on profits despite fall in sales

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Full-year profits at Britain’s second biggest supermarket have beat expectations, with total sales rising 0.3% for the second quarter. 

Like-for-like sales were down 1.1% during the 16 weeks to September 26, the seventh straight quarter of declines for the retailer. 

Sainsbury’s has been stuck in an ongoing price war with its rivals. Food prices have deflated in the midst of a race to discount items, with German rivals Aldi and Lidl becoming increasingly prominent threats to the market shares of the ‘big four’. 

“Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy, said CEO Mike coupe. 

The supermarket continued to “enhance” the quality of its own-brand products. “’Taste the Difference’ volume grew by over 4% in the quarter and was voted the best supermarket range by Good Housekeeping for the third year running,” Coupe continued. 

Clothing also grew by almost 13% in the quarter, bolstered by the success of the Back to School campaign and the Tu range now trading online. 

Sainsbury’s opened 27 convenience stores in the quarter, and was named ‘Convenience Retailer of the Year’ for the sixth year in a row at the Retail Industry Awards. Meanwhile, online grocery sales grew at over 15%, and the number of ‘Click and Collect’ sites was increased to 52.  

Sainsbury’s remains one of the strongest of the big four. According to Kantar’s most recent grocery share figures, it was also the only one to keep pace with the market share, whilst its main rivals saw their shares drop. 

Despite mixed views on this quarter, Sainsbury’s has nonetheless shown pride in its staff. “To recognise the hard work, talent and dedication of our store colleagues, we announced a 4% pay increase from 30th August, which is the highest annual pay increase for store colleagues in over a decade,” said Coupe. 

Keeping staff happy is a worthwhile investment for Sainsbury’s. A number of commentators have admitted that falling profits are to be expected in the current climate, but that at the end of this difficult period lies a position of prominence that Sainsbury’s could be well prepared to claim. 

Published on Wednesday 30 September by Philip Gallagher

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