Wet weather slows sales at Sainsbury’s

J SAINSBURY, the UK’s third-largest supermarket company, yesterday said sales growth slowed in the first quarter as a soggy start to the summer led to fewer bank-holiday braais, and forecast no let-up in competition.

CE Justin King said he expected the “tough and challenging market to remain competitive … the conditions reflect the tough challenges consumers face”.

The biggest area of promotion among grocers was the multi-buy offer, such as “buy one, get one free”. These accounted for about 40% of goods sold, Mr King said.

The retailer does not envisage any slowdown in such promotions, and will continue to offer its coupons at checkout as part of its Brand Match campaign, which promises to be cheaper than those of competitors, failing which shoppers get a voucher for the difference.

Revenue at Sainsbury’s stores open at least a year rose 1,4% in the 12 weeks ended last Saturday, excluding petrol, the London-based retailer said.

That compares with the 1,8% median estimate by nine analysts and was less than the previous quarter’s 2,6% increase.

Britain had the wettest April since at least 1910, and some forecasters predict rainfall this month may eclipse 2007’s record, weighing on sales of food and drinks for outdoor events over the five bank holidays in the quarter.

Sales growth at Sainsbury’s was helped by purchases of party food as Britons celebrated Queen Elizabeth’s diamond jubilee and was counter to a decline reported this week by market leader Tesco.

Tesco’s reporting period ended before the four-day jubilee holiday.

“Sainsbury did continue to outperform the market,” Shore Capital analyst Clive Black said.

“Still, the differential over Tesco may be starting to narrow,” he said.

Sainsbury’s fell as much as 2,9% in London trading and was down 2,6% at 283,5p yesterday.

The stock has fallen 6,4% this year, while Tesco has slid 25%.

Tesco, which has started offering more money-off vouchers to customers, said this week there was a “significant amount” of coupon activity, though this was not a long-term solution.

“The market has remained quite challenging and we see the continuation of the trends of savvy shopping and saving ahead of special events,” Mr King said.

The week of the diamond jubilee celebrations was a record sale outside of Christmas, he said. Bloomberg