Sainsbury's sales growth lags behind rivals, hitting supermarket's share price

Published on Wednesday 18 June 2008 21:21

SAINSBURY's reported a rise in sales in the first quarter yesterday but shares fell as the group continued to lag behind its rivals.

Britain's third-largest supermarket chain said like-for-like sales for the 12 weeks to 12 June were 3.4 per cent above the same time last year.

However, the group conceded that volume growth in the period had been minimal and sales were boosted by food price inflation.

Sainsbury's said its "Feed your family for a fiver" campaign, which is fronted by celebrity chef Jamie Oliver, had helped boost sales of its "basics" products, in a growing sign that consumers are tightening their belts.

Chief executive Justin King predicted continued price inflation over the next year but said the company would fight for customers, and its profit forecasts were unchanged.

"Whilst we anticipate that the environment will remain challenging, we operate from a strong financial position and our expectations for the full year remain unchanged," he said.

The growth is below that reported in recent weeks by Tesco, Britain's largest supermarket, and smaller rival Morrisons. Shares in Sainsbury's fell 3.1 per cent to 325.5p as sales came in at the bottom end of City forecasts.

The grocery giant has seen its shares almost halve in value over the last year as hopes of a takeover fade.