Sainsbury’s boss warns of tough year ahead as sales growth eases

Sainsbury's chief executive warned of tough conditions despite retailer's sales boost. Picture: Getty
Sainsbury's chief executive warned of tough conditions despite retailer's sales boost. Picture: Getty
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SAINSBURY’S rang up slowing quarterly sales growth today as its chief executive warned of no let-up in chronic nervous consumer sentiment in 2013.

Posting 0.9 per cent like-for-like sales growth, down from 1.9 per cent in the previous three months, Justin King cautioned: “We would expect 2013 to be much like the last two or three years, with relatively low levels of consumer confidence.”

Despite the challenging backdrop, King pointed to the latest data from research firm Kantar Worldpanel which showed Sainsbury’s was the only one of the “big four” supermarkets to gain market share in the latest period.

Kantar said the group’s food retailing market share rose 0.1 per cent to 17.1 per cent, while Tesco, which reports today, dipped 0.1 per cent to 30.5 per cent.

Sainsbury’s total sales for the 14 weeks to 5 January lifted 3.9 per cent. King said the seven days leading up to Christmas was the group’s strongest trading week ever.

“We saw a record-breaking £16 million of sales in one hour between 12pm and 1pm on Sunday, 23 December and experienced our best ever Christmas Eve, at both our supermarket and convenience stores, with over £100m of sales,” King said.

The group said its own-brand products grew sales at three times the rate of independent brands, while customers spent more than £110m of Nectar points they had collected, splashing out on the festive period.

The company’s convenience stores grew sales by more than 17 per cent, and the online business was up over 15 per cent. King said those businesses were “really important because it’s where the lion’s share of growth is coming from”.

Rival Morrisons partly blamed a 2.5 per cent sales slide over the festive period on it having no online food offering currently and only a fledgeling convenience store business, with just a handful of outlets.

King said he did not believe the differing performances of supermarket groups could be just attributed to this factor, however, saying that Sainsbury’s online and convenience arm was still less than 10 per cent of group sales.

In non-food during the period, its clothing sales rose 10 per cent while small electricals were up 24 per cent.

Analysts said one reason for the slowing sales growth at Sainsbury’s, which has a little under 50 main stores in Scotland, was strong comparators in Christmas 2011. It was the 32nd consecutive quarter of underlying sales growth, excluding fuel, at the group, however.

During the latest quarter, the chain added six supermarkets, five extensions and 19 convenience stores, saying yesterday it was on track for one million square feet of new space in its current financial year.

King said the group estimated

volumes of food sales were down

“between 1 and 2 per cent” over the past two years, which he attributed to “less food waste” in an austerity climate.

One analyst commented: “Sainsbury’s growth has slowed, but in this climate everything is relative and its gain in market share shows it is currently still one of the winners in the food retail space.”

Shares closed down 2.9 per cent at 329.2p, valuing the business at about £6.2 billion.