Sainsbury's cautious for the full year despite sparkling Easter sales

Published on Tuesday 14 June 2011 22:48

SPARKLING Easter weather and the royal wedding gave a lift to quarterly sales at Sainsbury's, but the retailer revealed yesterday that consumer sentiment had only "bumped along the bottom" since the recession.

Justin King, chief executive, said that in the 12 weeks to last weekend the company had benefited from "fantastic weather, Easter, four public holidays and the royal wedding".

King said it had been an opportunity for people to "let their hair down", shown by Sainsbury's selling the most champagne in the fortnight up to the royal wedding outside of the Christmas period.

Britain's third-biggest supermarket group posted a first-quarter 1.9 per cent rise in shops open over a year, excluding fuel, but including VAT. That was virtually double the 1 per cent sales growth Sainsbury's had in the final quarter of its last financial year.

The group's Q1 performance also outstripped 1 per cent growth reported by rival Tesco earlier this week. However, King was cautious for the full year, saying he felt that the environment for shoppers was "the toughest its ever been" in his near-30 years in the food retailing trade.

"We have seen this for three years, it's the continuation of a theme. It's particularly sharp now because of fuel (price rises]," he said.

Petrol and fuel price rises were a bigger component of rising inflation, he added, than food price inflation. King cited the 60 per cent of Sainsbury's overall sales growth in the quarter that came from fuel.

He said that fuel prices had gone up 15 per cent for two years running and had "punched a hole" in customers' budgets.

Sainsbury's, which has nearly 50 supermarket stores and a little under 20 convenience outlets in Scotland, has been expanding its online offering, with 400 stores now with a "click and collect" service. It plans to double this number by Christmas.

King added that customers had switched to the company's cheaper, own-branded products to save money, but he was comfortable with a City consensus forecast for full-year sales growth of 2.3 per cent.

He said the group's "Basics" range of cheaper products had leapfrogged Asda's economy offering to become number two in that segment of the food retailing market behind Tesco. Sainsbury revealed that its non-food offering was growing at a little under three times the rate of food, although electrical goods' sales had come under pressure.

However, King said the quarterly comparatives with last year were tough when there had been a big rise in electrical sales in the run-up to the football World Cup. The shares closed down 3.2p at 323.6p.