Sainsbury’s sales fall in tough Christmas market

Sainsbury's festive advertising drew on the First World War Christmas Truce story, but there was no let-up by its competitors. Picture: PA

Sainsbury's festive advertising drew on the First World War Christmas Truce story, but there was no let-up by its competitors. Picture: PA

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SAINSBURY’S revealed same-floorspace sales fell 1.7 per cent in the third-quarter trading period which takes in Christmas, and forecast that consumers would tighten their belts over the next two months “as the credit-card bills arrive”.

Mike Coupe, chief executive of Britain’s fourth largest supermarket group, said although Sainsbury’s had done a “brilliant job” in a tough market over Christmas it remained cautious in both the short and mid-term.

“It’s the quarter when customers typically tighten their belts post the Christmas splurge,” Coupe said. “The low point of sales is the second week of February just before Valentine’s [Day] when credit-card bills arrive.”

Sainsbury’s, like the other big three UK food retailers, has been facing rising competition from the discounters Aldi and Lidl.

In response, it announced last ­November it was investing £150 million in reducing the prices of staples, such as meat, fish and poultry, with 1,000 product prices reduced since then.

“We will fight toe-to-toe on price,” Coupe said.

The group said there were 29.5 million customer transactions in the seven-days before Christmas, while sales in its Sainsbury Local convenience stores and online climbed 16 per cent and 6 per cent respectively.

It said the biggest ever day for convenience store sales was Christmas Eve, when the company took more than £8m.

Coupe, talking about the systemic changes in the supermarket sector, said that in the 14 weeks to 3 January “there’s no change to the trend we have seen over the past four or five years. There’s a continuation towards ‘a little and often’ shopping,” he added.

The chief executive said the rapidly falling oil price, down more than 50 per cent since last summer, had put an extra £5 or so in consumers’ pockets, to help with food spending.

Coupe would not be drawn on Sainsbury’s potential participation in possible food retailing consolidation given the competitive pressures. But he said: “Inevitably, the pressures in the industry may lead to some form of structural change.”

Sainsbury’s said its clothing and general merchandise traded strongly over the period, with clothing sales up nearly 10 per cent.

Coupe also predicted Sainsbury’s, Tesco, Asda and Morrisons would achieve “equilibrium” with Aldi and Lidl over the next couple of years as the sales returned to normal levels and the discounter’s stellar growth slowed.

He dismissed suggestions Sainsbury’s could be badly hit by an upturn in Tesco’s fortunes, saying in the past critics had been proved wrong having “written us off on the same speculative basis”.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “Sainsbury remains as well-positioned as any to benefit from the ­inexorable move towards online and convenience store shopping.”

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