Sainsbury’s steals a march on rivals as it outperforms City forecasts

SAINSBURY’s rubbed salt in the wounds of embattled rival Tesco yesterday, as the UK’s third- largest supermarket group trumped City forecasts for fourth-quarter growth.

Chief executive Justin King said: “We continue to outperform the market and gain market share.”

The group, which ranks as Scotland’s fifth biggest food retailer with nearly 50 superstores and 16 convenience outlets, rang up like-for-like sales growth of 2.6 per cent in the ten weeks to 17 March.

That beat City expectations for a lift of 2.1 per cent, and came after Tesco, the market leader, posted a 2.3 per cent sales drop in January, triggering its first profit warning in two decades. Tesco has also been jolted by a raft of management changes recently, including the departure of its UK boss.

However, King, pointing to 29 consecutive quarters of like-for-like sales growth at Sainsbury’s, said: “We don’t require anybody else to fail for us to succeed.”

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, commented: “Tesco’s current wobble is providing opportunities for others, and Sainsbury’s is one of the supermarkets which seems to be capitalising on the situation.

“In particular, the company’s drive for value both in terms of price matching and own brand is paying dividends, whilst non-food and the complementary online service are also contributing to growth.”

The group’s total sales, including newly opened stores and extensions, rose 4.6 per cent, and 5.1 per cent excluding fuel.

King said the economic climate remained tough for consumers, but added that events this summer, such as the Queen’s Diamond Jubilee and the London Olympics, were opportunities for growth.

Sainsbury’s peers have yet to report on periods that significantly overlap, but recent market share data has shown that the group has been at or near the forefront of the supermarket sector.

The chief executive said the latest quarter had completed “a good performance for the year against a challenging backdrop”. He said the firm’s Local-branded convenience store business and online offering were both growing ahead of those markets, at more than 20 per cent each.

The City consensus for Sainsbury’s 2011-2012 underlying pre-tax profit, stripping out exceptional items, is about £700 million. That compares with £665m in the previous financial year.