Sainsbury’s posts first like-for-like sales decline for 36 quarters

Sainsbury's: sales decline in Q4 reflects strong comparatives

Sainsbury’s: sales decline in Q4 reflects strong comparatives

Sainsbury’s has reported a 3.8% decline in like-for-like sales in the 10 weeks to 15 March 2014 – the first dip in 36 quarters.

Total sales for the fourth quarter were down 1.5%.

Justin King, chief executive, said: “We have seen a decline in sales in the quarter reflecting tough comparatives. This time last year our sales benefited significantly from the discovery of horsemeat in some branded and competitors’ products. We are pleased, however, that market data shows we have maintained market share at 17%.

“The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers. The later timing of Easter and Mother’s Day, which fall in quarter one of our new financial year, and unseasonable weather have also contributed to lower market growth year-on-year.”

Sainsbury’s said it continues to enjoy growth in its own-brand ranges, significantly ahead of branded products, with penetration now at 51%, versus 47% for the market. 

The retailer’s general merchandise and clothing business is also reported to be performing well with growth in menswear of over 23% year-on-year. During the quarter Sainsbury’s announced the renewal of its collaboration with the designer Gok Wan for a further 12 collections, and released its eleventh collection of his ladieswear. Following successful trials, Sainsbury’s has introduced a new general merchandise and clothing format into 53 stores, with a further 26 planned for the first quarter of the next financial year.

Sainsbury’s reported growth in its convenience business remains strong at over 15%, and for the first time, during the quarter it recorded one million transactions in a day. As well as opening around two new stores per week, it is part way through a programme to refit produce equipment in existing stores, responding to customer demand for more fresh food. Its groceries online business is reported to be growing at 6% year-on-year, reflecting a reduction in marketing while the new customer website is launched. This roll-out is 80% complete and is due to finish in April.

Sainsbury’s opened approximately one million square feet of new space over the year including 22 convenience stores during the quarter. 

Commenting on the results, Bryan Roberts, retail insights director, Kantar Retail, said: “Much will be made of the first like-for-like sales decline for 36 quarters. But we feel that the run was destined to come to an end in a quarter marked by profound frugality from shoppers, volume declines in many categories, huge levels of couponing and the fact that even Sainsbury’s will have lost some shopping trips to the German discounters.

“The business is still in generally good shape and its outperformance of the big four competitors, in market share terms, remains a reassuring trend. A longer term worry is the spectre of a ‘price war’ that could disproportionately impact Sainsbury’s relatively thin margins. Another concern is Sainsbury’s hesitancy in embracing click & collect for grocery. It is clearly favoured by many shoppers and also tilts the economics of grocery ecommerce in a retailer’s favour.”