Sainsbury's sees like-for-like sales down 1.9% in latest quarter

By Arabella Mileham

Published: 17 March, 2015

Sainsbury saw like-for-like retail sales fall 1.9% in the ten weeks to 14 March 2015, as it warned that food deflation is here to stay.

Sainsbury saw like for like retail sales fall 1.9% in the ten weeks to 14 March 2015, following "record" levels of food deflation start to bite.

Trading in the fourth quarter remained "challenging" chief executive Mike Coupe said, but he argued the retailer's fourth quarter results demonstrated its improved competitiveness.

"Since we announced our Strategic Review in November we have lowered the regular prices of over 1,100 products, ensuring our price position relative to our major competitors has never been stronger," he said.

The company had previously announced its intention to invest £150m into making its prices more competitive, with half of the investment coming in the second half of the finical year and the rest coming in the first half of the 2015/2016.

Sainsbury's argued there was a positive response to price investment which was resulting in volume growth and like-for-like transactions rising in store. Growth in convenience also remained strong at 14%,. and online order numbers increased by 14%, it said. The company confirmed that by the end of 2015 it will have rolled out Click and Collect to over 100 sites.

"This is yet another way for us to serve our customers whenever and wherever they want," Coupe said. "We believe that the great value and quality of our products, combined with a strong focus on developing our multi-channel offer, will enable us to outperform our supermarket peers."

Marketing professor at Aston School of Business, Heiner Evanshitzky, argues that the major retailers should take advantage of discounters' success, but siting shops next door.

However Coupe remained cautious, arguing that food deflation will remain for the rest of the calendar year, and competitive pressures on price will continue.

In November Sainsbury's released half-yearly results showing the company's underlying profits dropped 6.3% to £375m, the worst performance in over a decade for the company - which it attributed to "once-in-a-generation" shifts in the retail sector.

It made some progress over they key Christmas period, reported the strongest performance of the big four - the first time it has done so since 2003. However sales still fell by 0.7%.

City Analyst Clive Black of Shore Capital said the retailers' overall out-turn was better than had been feared, but it was still a business that had outperformed quarter-on-quarter for many years and was now "demonstrably under-performing". He argued that its performance depended both on prevailing market conditions and the performance of Tesco, which was "gradually regrouping after a sustained period of under-performance and near-term toil". A better turn out from Tesco was likely to negatively impact Sainsbury's he said.

"It makes Coupe's assertion that Sainsbury will outperform its peers all the more interesting," he said.

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