Sainsbury’s Q4 sales beat forecasts

Strong growth online and in convenience stores offset a weaker performance in traditional stores.

The group said it was well positioned to continue to outperform the market in its new financial year, even though it expected the economic environment to remain tough.

Many of Britain’s grocers are finding the going tough, despite their focus on essential goods. Britain is teetering on the brink of a third recession in four years and consumers are fretting over job security, wages growth not keeping up with inflation and Government cuts.

Last week, Bradford-based Wm Morrison posted a four per cent fall in 2012-13 underlying profit.

Sainsbury’s said sales at stores open over a year rose 3.6 per cent, excluding fuel, in the 10 weeks to March 16.

That was a 33rd consecutive quarter of underlying sales growth and compared with analysts’ average forecast for a rise of 2.3 per cent, and growth of 0.9 per cent in the third quarter.

The firm said its convenience store business was growing at over 18 per cent year-on-year, driven by a combination of new selling space and like-for-like sales growth. Online grocery sales increased nearly 20 per cent year-on-year.

Sainsbury’s total sales in the fourth quarter rose 6.3 per cent, excluding fuel.

The group 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 clothing.

The firm’s market share edged-up to 17.0 per cent in the 12 weeks to February 17 from 16.9 per cent a year earlier, according to market researcher Kantar Worldpanel.

Some analysts say Sainsbury’s is vulnerable to a recovery at Tesco, which has invested £1bn in a plan to revive its fortunes after a dismal Christmas in 2011 led to its first profit warning in 20 years. Last week Tesco launched a major new price initiative.

Shares in Sainsbury’s closed on Monday at 365.2p, valuing the business at £6.9bn.

Some 26 per cent of the equity is owned by the Qatar Investment Authority, which has recently been linked with a potential bid for clothing and food retailer Marks & Spencer.