Sainsbury’s expected to report sales dip

Sainsbury’s is set to report a dip in first quarter sales this week, with chief executive Mike Coupe likely to be questioned on the progress of the supermarket’s £12 billion merger with Asda.

The grocery giant is tipped by analysts at Barclays and Jefferies to report a 0.1% fall in like for like sales in the three months to July. It compares with a 0.9% increase in the fourth quarter.

James Grzinic, of Jefferies, said the trading update would be “sluggish”, with soft demand for general merchandise products at Argos behind the dip.

It would confirm recent figures from Kantar showing sales at Sainsbury’s slipped 0.2% over the past 12 weeks and its market share fell 0.4% to 15.6%.

The data was in stark contrast to rivals Asda, Tesco and Morrisons, where sales were boosted by the recent heatwave.

Lacklustre figures aside, the spotlight is expected to fall on the Asda merger, with Mr Coupe to face further probing over the deal as analysts turn their attention to the Competition and Markets Authority investigation.

James Anstead, analyst at Barclays, said: “We have long thought that the merger of Sainsbury’s and Asda makes sense – the question is whether the competition remedies will render the proposed deal uneconomic.

“The view of the CMA will likely remain unknown until mid-2019.

“We are sceptical about store disposals being highly material given that both companies have taken extensive advice and are investing considerable credibility into the transaction.”

The unified group would have combined revenues of £51 billion and eclipse Tesco’s UK market share.

It would boast a network of 2,800 Sainsbury’s, Asda and Argos stores.