Saturday, February 23, 2019

Sainsbury’s second quarter results remain solid amid escalating price wars


Sainsbury‘s second quarter results indicate a decline in like-for-like sales by 1.1 per cent and a 0.4 per cent decline in total sales.

This is better than original predictions of a drop by at least 1.9 per cent by Deutsch Bank earlier this week amid continuing food deflation due to the price wars.

Total growth across all sectors was achieved in the 16 weeks to September 24. During this period Sainsbury‘s finalised its acquisition of Home Retail Group, which owns Argos and Habitat, and three of these weeks represent trading across the new group.

General merchandise performed best across the board, with sales up four per cent. Argos also reported a three per cent sales growth despite the undergoing significant upheaval in the acquisition process.

The grocer‘s decline in growth is in part due to the ongoing price war, as well as significant investment in due to the acquisition. Sainsbury‘s statement said they will aim to integrate 200 Argos collection points within their stores by the end of the year, leading to investment in refurbishment of its stores.

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It has announced that in order to stay competitive in the price war it has scrapped much of its multi-buy promotions in favour of lowering prices of every-day items.

Now one of the biggest retailers in the country, employing just under 200,000 staff, it announced a four per cent pay increase for all staff starting on August 28.

On November 9 Sainsbury‘s will release its interim results which is expected to paint a clearer picture of its acquisition figures, as it is currently still in a transitional period.

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“We continue to make progress against our strategy and, while like-for-like sales were down 1.1 per cent (excl. fuel), driven by food price deflation, we delivered like-for-like transaction growth across all channels and total volume growth,” chief executive Mike Coupe said in a statement.

This shows that customers are consistently choosing Sainsbury‘s for the choice, quality, value and customer service we offer.

“We expect the market to remain competitive and the effect of the devaluation of sterling remains unclear. However, Sainsbury‘s is well positioned to navigate the changing marketplace and we are confident that our strategy will enable us to continue to outperform our major peers.”

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