Sainsbury’s today posted a second consecutive quarterly fall in sales as it remained under pressure amid the bitter supermarket war and food price deflation.
Britain’s second-biggest grocer, which recently completed its £1.4 billion takeover of Argos, reported a 1.1 per cent drop in like-for-like sales excluding fuel for the second quarter.
Chief executive Mike Coupe said: “We continue to make progress against our strategy and, while like-for-like sales were down 1.1 per cent, driven by food price deflation, we delivered like-for-like transaction growth across all channels and total volume growth.”
Sainsbury’s added that Argos notched up like-for-like sales growth of 2.3 per cent during the period, with Coupe saying the group will open 200 new digital collection points by the end of the year. Thirty Argos digital outlets will be open in Sainsbury’s stores by Christmas.
The grocer is slugging it out with rivals in a brutal price war which has eroded margins at all of the so-called big four supermarkets.
Sainsbury’s pledged to “remain competitive”, adding that it has made further investments in the prices of everyday items such as broccoli, onions and its frozen deep pan margherita pizza.
Coupe said: “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.”
However, John Ibbotson, director of consultancy Retail Vision, said the grocer had “come down to earth with a bump” as cut-price rivals Aldi and Lidl continue to apply intense pressure on the sector.
“A year ago Sainsbury’s was congratulating itself for retaining its middle-class client base while the German discounters decimated their rivals at Tesco and Morrisons,” Ibbotson said.
“Now Tesco and Morrisons have staunched their losses and are fighting back with aggressive price cuts and some fundamental reforms to their structure. By contrast the Sainsbury’s response – the abolition of multi-buy promotions and the introduction of simpler pricing – looks distinctly underwhelming in the current brutal market conditions.”