Sainsbury’s sales dip

The supermarket group, which trails market leader Tesco and Wal-Mart’s Asda by annual sales, said sales at stores open over a year fell 1.9 per cent, excluding fuel, in the 10 weeks to March 14, its fiscal fourth quarter. That compares with a third quarter fall of 1.7 per cent.

Britain’s supermarkets are grappling with food price deflation and a price war launched to counter the rise of discounters Aldi and Lidl.

They are also having to adapt to changing shopping patterns as customers buy more online and locally, instead of going to out-of-town stores.

“We expect the market to remain challenging for the foreseeable future. Food deflation is likely to persist for the rest of this calendar year, and competitive pressures on price will continue,” said chief executive Mike Coupe.

However, he said Sainsbury’s would outperform its supermarket peers. Until early last year, Sainsbury’s had reported nine unbroken years of sales growth with a strategy focused on own-brand products, the quality, provenance and ethical credentials of its food, and on expanding its fast-growing convenience and online businesses.

But it said in November it expected supermarket like-for-like sales in the sector to be negative for the next few years. In response it is cutting costs, dividends and new store openings to fund an extra £150m investment in lower prices.

The supermarket has cut more than 1,100 prices since November.

“Our price position relative to our major competitors has never been stronger,” said Mr Coupe.

He noted that where the firm has cut prices it has seen average volume growth of over three per cent.

Sales at Sainsbury’s convenience stores rose 14 per cent over the quarter, while its groceries online business saw order numbers increase by 14 per cent.