Sainsbury’s shares bounce after profit upgrade

Group chief executive Mike Coupe said Sainsbury's was making good progress. Picture: AFP/Getty Images

The better performance helped other leading supermarket stocks, with Tesco and Morrisons attracting investor interest on hopes the worst of the chronic pressures on the sector may be easing.

Sainsbury’s unveiled a 1.1 per cent fall in same-floorspace second-quarter sales to 26 September – its seventh consecutive quarter of declines.

But the performance was better than the 2.1 per cent like‑for‑like sales fall seen in the previous three months and Sainsbury’s said it saw the number of sales and transactions rise. It added that lower average basket spend in supermarkets continued to stabilise.

The group now expects full-year profits to be “moderately” ahead of the £548 million expected in the City, although this is still a slump from the £681m reported the previous year.

The big four supermarkets, also including Wal‑Mart‑owned Asda, have been squeezed by food deflation and fierce price promotions in the industry triggered largely by the rising popularity of Aldi and Lidl.

But Sainsbury’s said it was being helped by its turnaround programme of price cuts and promotions, with better-than-expected sales and cost savings in its second quarter.

Mike Coupe, group chief executive, said the market was “clearly still challenging”, but added “we are making good progress”.