Grocer aims to outdo its peers as sales rise

The supermarket chain is seen as more upmarket than the other big four - Tesco, Asda and Morrisons - which means it hasn’t lost so many customers to Aldi and Lidl.

Sainsbury’s said like-for-like sales rose 0.1 per​ ​cent in the nine weeks to March 12​, an improvement on the 0.4 per cent decline in the previous quarter and better than analysts’ forecasts of a decline of up to 0.6 per cent.

Chief financial officer John Rogers said; “This is the first positive like-for-like sales increase in over two years. It gives us further encouragement our strategy is working.”

Chief executive Mike Coupe said it was too early to say that the worst is behind.

“It would be very premature to call the turn,” he said.

“A bit of sunshine makes all the difference in our industry.”

Sainsbury’s has committed itself to phasing out 99 per cent of multi-buys by August. This follows a customer backlash against misleading buy one get one free (Bogof) promotions.

“We’ll continue to match our competitors toe to toe,” said Mr Coupe.

“We have the financial capacity to do that.”

Sainsbury’s remained tight-lipped about whether it will raise its offer for Argos-owner Home Retail. The grocery chain is embroiled in a two-way battle for Argos with South African company Steinhoff International and both suitors have until 5pm on Friday to make a firm offer or walk away.

Sainsbury’s made a £1.3bn cash and shares offer for Home Retail in February, but Steinhoff trumped it with a 175p per share proposal, valuing it at £1.44bn.

Mr Coupe was constrained by stock market rules, but said Sainsbury’s will not overpay for Argos.

“It’s by no means a must do deal. We’ve said there’s a price and we won’t go beyond that,” he said.

He dismissed the suggestion that a failure to land Argos would leave a major question mark over Sainsbury’s strategy.

“You can see from the numbers that the business has moved forward well on a number of fronts,” he said. “There’s no reason why Sainsbury’s wouldn’t be a successful business in the future without Argos.”

If Sainsbury’s is successful, the deal would create the country’s largest general merchandise retail business, bigger than Marks & Spencer or John Lewis.

Shore Capital analyst Clive Black said: “All eyes are now on the March 18 deadline for any further bid to acquire Argos, in which the British grocer still faces formidable competition, to our minds, from German listed Steinhoff. We expect Sainsbury’s to try again.”

Steinhoff, which has a retail presence in the UK through Bensons Beds and the Harvey’s furniture chain, has a market value of about £16.5bn - nearly three times that of Sainsbury’s.

Sainsbury’s said entertainment sales jumped 11 per cent following strong new releases such as Adele’s latest album ”25” and the James Bond movie, Spectre.

The group’s chief executive Mike Coupe said the firm is progressing well with its quality investment in 3,000 own-brand products.

“The new year is traditionally a time when customers focus on healthy eating​,” he said.​

​“To cater for this demand we launched a number of vegetable-based product innovations including boodles (butternut squash noodles) and courgetti (spiralised courgette) which are proving extremely popular with our customers.”