Jubilee fever sees an extra 2m head to grocer

AN extra two million shoppers flocked to Sainsbury’s stores ahead of the Queen’s Diamond Jubilee, although the dismal weather and bleak economic outlook mean sales growth has slowed over the past three months.

Sainsbury’s declared itself a Jubilee winner with record sales of strawberries - over two million punnets were sold - while partygoers quaffed 600,000 bottles of champagne and sparking wine, and waved 670,000 Union Jacks.

Sainsbury’s chief executive Justin King said: “We were definitely Jubilee winners. We sponsored the beacons and the Thames Diamond Jubilee Pageant. We also made sure we had the right products in store.”

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Sainsbury’s reported 24 million customer transactions in Jubilee week, two million more than normal, making it the biggest ever sales week outside Christmas.

But Mr King admitted that many shoppers cut back on spending to save money ahead of the festivities in order to treat themselves over the four-day weekend.

This resulted in a 1.4 per cent rise in life-for-like sales during the 12 weeks to June 9, a slowdown from the 2.6 per cent growth seen in the previous quarter.

Sainsbury’s shares fell three per cent to close down 7.6p at 283.5p after analysts said the lift from the Jubilee failed to make up for the poor weather and gloomy economic outlook.

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Analysts at Credit Suisse said in a note: “We think the unfavourable Jubilee weekend weather impacted like-for-like performance slightly, hence the slight shortfall versus our and consensus expectations.”

Sainsbury’s, the UK’s third biggest grocer after Tesco and Leeds-based Asda, said its performance outclassed rivals.

Mr King said the group’s performance should be read in the context of a slowing UK grocery market.

“1.4 per cent, that’s a good beat to the market and if anything a better beat to the market than in the fourth quarter because we estimate the market slowed down in quarter one versus quarter four by about 1.5 per cent,” he said.

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“So in relative terms, if anything, it’s a notch up, not a notch down.”

Sainsbury’s outperformed market leader Tesco, which reported a 1.5 per cent fall in first-quarter underlying UK sales on Monday although Tesco’s figures did not include the Jubilee holiday.

Phil Dorrell, director of retail consultants, Retail Remedy, said: “These robust Sainsbury’s numbers are in stark contrast to those issued by Tesco earlier in the week. The two stores are going in entirely different directions.

“Whereas Tesco has become a Jack of all Trades, Sainsbury’s has single-mindedly focused on British consumers and their shopping experience. It has shown good old-fashioned retailing discipline and the results are evident.”

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Last month Asda reported a 2.2 per cent rise in underlying sales in its first quarter, while number four player Bradford-based Morrisons reported a one per cent fall.

Sainsbury’s own-label ranges have played a key part in the group’s success.

The grocer is three-quarters of the way through revamping its By Sainsbury’s own-label range, adding new products and improving existing ones.

Sainsbury’s total sales including new space rose 3.6 per cent.

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The group said highlights included the success of its “Brand Match” pricing promotion, which offers money-off vouchers if shoppers could have bought branded goods for less at Tesco and Asda.

It has made market share gains in general merchandise, with the quarter seeing the strongest ever sales week in clothing, helped by a new range by celebrity fashion consultant Gok Wan.

The Sainsbury’s Local convenience store estate enjoyed 16 per cent growth after 21 new stores were opened in the period.

Improvements to its website allowing shoppers to order easily from mobile phones helped drive a 20 per cent rise in online sales.

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Analysts at Seymour Pierce kept their forecast for profits this year at £770m, compared with £712m a year earlier, and said the company should see some benefit from sporting events such as the Olympics.

Mr King said that a successful Olympics could help boost the public mood, as could the Euro 2012 football championship if England progress to the latter stages.

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