Sainsbury’s posts 1.1% fall in like-for-like sales in Q2 but must ride out storm, says Planet Retail

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Sainsbury’s has reported a 1.1% fall in like-for-like sales in the second quarter, excluding fuel. Total sales ,excluding fuel, were up 0.3%.

David Gray, retail analyst at Planet Retail, said “Once again, Sainsbury’s has posted a subdued set of like-for-like numbers – though improving and markedly better than some arch-rivals, notably Asda. The simple fact is the retailer is reeling from the effects of industry-wide falling food prices and stagnant overall food volumes – which, combined, are proving a drag on sales.

“Add to this the twin threats of the growth of the German hard discounters at the value end of the market and Waitrose/M&S Food at the premium end and Sainsbury’s is stuck squarely at the centre of a perfect storm. Finally, the impact of Tesco’s nascent UK recovery on its smaller competitor has yet to filter through – and the chances are it will not be a positive one.

“Despite this, Sainsbury’s remains one of the best among a bad bunch – Asda and Morrisons being way behind on like-for-like performance. It also has some key attributes that will stand it in good stead going forward – a sizeable and growing convenience business, fewer very large hypermarkets than its rivals and a still-effective loyalty scheme in Nectar.

“It is also working tirelessly to adapt its big-box formats to a new retail reality through moves like the Argos shop-in-shops and investing in refurbishments to enhance the instore experience – all of which, we feel, will leave it better positioned when the present unfavourable headwinds have passed.”