Sainsbury’s eclipses Tesco with rising sales growth

The group, which trails Tesco and Leeds-based Asda by annual revenue, said sales at stores open over a year rose 2 per cent, excluding fuel, in the 16 weeks to September 28, its fiscal second quarter.

The outcome, a 35th consecutive quarter of underlying sales growth, compares with analysts’ forecasts of a rise of 1.5-2.8 per cent and first quarter growth of 0.8 per cent.

Sainsbury’s performance was ahead of flat second quarter UK like-for-like sales at Tesco.

Online and smaller local convenience stores are the two fastest growing areas in the grocery sector as shopping habits change. Consumers are increasingly using the internet to shop and high fuel prices are discouraging trips to town centres and out-of-town malls.

Sainsbury’s online grocery sales rose by over 15 per cent in its second quarter, while convenience store sales increased 20 per cent as customers topped up more often during the warm summer weather, the firm said.

Total sales for the second quarter rose 4.6 per cent excluding fuel.

Sainsbury’s, whose current grocery market share is at a near decade high of 16.6 per cent, just behind Asda, has also benefited from the success of its “Brand Match” pricing initiative, growth of own-brand sales and a big push into non-food areas such as kitchen electricals and cookware.

According to market researcher Kantar Worldpanel, Sainsbury’s was the only one of the “Big Four” grocers, which also includes Bradford-based Morrisons, to increase its market share over the last year.

Chief executive Justin King said the firm was “ideally placed to perform well coming into the key Christmas period”.

Shares in Sainsbury’s, up 13 per cent over the last year, closed Tuesday at 390.2 pence, valuing the business at around £7.4bn.