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"Worrying" times for Sainsbury's as supermarket points to unstable climate for sales set-back

Published:  16 March, 2017

Sainsbury's has warned of "very competitive" trading conditions in the wake of the post-Brexit sterling slump as the supermarket suffered a slight sales decline in the fourth quarter of the financial year.

Sainsbury's has warned of "very competitive" trading conditions in the wake of the post-Brexit sterling slump as the supermarket suffered a slight sales decline in the fourth quarter of the financial year.

Price pressures and higher importing costs related to Brexit have hit Sainsbury's this quarter.

In its results for the three months to 11 March, the supermarket's like-for-like sales fell by 0.5% compared to the same period the previous year.

This was offset somewhat by 4.3% like-for-like sales growth at catalogue retailer Argos, which Sainsbury's bought last year for £1.4bn.

In a statement, group chief executive Mike Coupe said that the market remains "very competitive and the impact of cost price pressures remains uncertain", but added that the supermarket was "well placed to navigate the external environment."

He also pointed to this year's last Easter and Mother's Day as impacting general merchandise sales which were down 4% over the quarter.

But with currency instability and Theresa May expected to trigger Article 50 by the end of the month, the fall in sales also points to consumers erring on the side of caution and tightening their purse strings.

"Sainsbury's stopped doing so many offers and promotions in favour of lowering prices of every day goods. These results could suggest that we're all a sucker for a bargain," Martin Lane, managing editor at www.money.co.uk explained.

"Although promotions often aren't the cheapest, they make us feel like we're getting more for our money. For lower priced items, we're going to the likes of Aldi and Lidl and only shopping at the Big Four for luxury items - worrying times for the supermarket chain."

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