Supermarkets take a hit from threat of price war

SHARES in British supermarkets were under pressure yesterday after amazon said it would slash the price of everyday groceries after it completes its £10.7bn takeover of Whole Foods on Monday.

Setting the scene for a new price war in the UK that could cut the cost of the weekly shop for millions of families, amazon said products such as bananas, avocados, eggs, salmon and rotisserie chicken will all be cheaper.

although Whole Foods has only nine stores in Britain, concerns about amazon’s foray into the grocery market sent shares in

Tesco down 1.7pc or 3.25p. to 184.2p while Sainsbury fell 0.5pc, or 1.1p, to 236.1p. Morrisons fell 0.4pc, or 0.9p, to 251.4p and Marks

and Spencer was down 1.1pc, or 3.5p, to 312.9p. In addition to cutting prices, some Whole Foods products will be on the firm’s online supermarket.

Jeff Wilke, chief executive of amazon Worldwide Consumer, said the firm is ‘determined’ to make healthy and organic food affordable for all, and vowed to ‘continuously lower prices’.

Britain’s so- called Big Four supermarkets – Tesco, Sainsbury’s, asda and Morrisons – are reeling from an assault on their market share by discount rivals aldi and Lidl. The emergence of another player with significant firepower is likely to pile further pressure on the sector.

‘Change, much like the deal that facilitates it, is coming much faster than anyone imagined,’ said Neil Saunders, managing director at GlobalData retail.

‘rivals should be under no illusion that they are now dealing with a competitor that is not afraid to damage profits and margins if it creates long term gains.’

after a topsy-turvy week that saw Provident Financial, WPP and Dixons Carphone issue warnings over the shape of their businesses, the FTSE 100 index ended 5.6 points down at 7401.46.

Provident Financial continued its fightback after shares crashed 66pc following a bleak profits warning on Tuesday. The stock rose 22.5pc, or 168p, to 916p, a third day of gains, although it is still down 45pc this week.

There was no such bounce back for WPP, which was down 1.7pc, or 25p, to 1437p following its 11pc slump on Wednesday, though Dixons Carphone edged up 0.9pc, or 1.7p, to 182.5p having fallen 23pc on Thursday. Frankie & Benny’s owner The

Restaurant Group fell 5.1pc, or 17.5p, to 322.9p ahead of results next week when it is expected to report another fall in profits.

a consensus of City analysts forecast that half-year pre-tax profit will fall over 30pc to around £25m as warm June weather and poor cinema attendance look set to have dented footfall. Because of their locations, sales at the restaurants, which also include Garfunkel’s and Chiquito, are closely aligned to cinema attendance.

Shares in Hunting were on the slide once again, dropping 5.9pc, or 25.1p, to 402.1p. The company supplies the oil and gas industry and has been hit by decline in the price of crude. The latest slump in the share price came after analysts at Deutsche Bank cut their target price from 700p to 530p.

Mining stocks enjoyed a good close to the week thanks to a surging copper price in anticipation of new restrictions in China.

The metal hit a three-year high on Tuesday and has sustained its rally. Major Chilean producer

Antofagasta rose 0.8pc, or 8p, to 1022p, while fellow miner BHP Billiton was up 1.4pc, or 20p, to 1437p

and Anglo American gained 0.9pc, or 11.5p, to 1339.5p.