Sainsbury’s set to hold the high ground in store giants rivalry

Tesco is expected to suffer another setback today when it reveals it has continued to lose out to rivals despite heavy discounting and a £1bn recovery plan.

The chain, which is the UK’s biggest supermarket with 2,800 stores, is fighting to win back shoppers after dire trading led to its first profits warning in 20 years, while its shares recently hit three-year lows.

Chief executive Philip Clarke, who recently declined his bonus because of the poor performance, has launched a recovery plan that has seen the grocer focus on revamping stores, hiring more staff and sharpening pricing.

But a trading update for the first quarter of its financial year is expected to reveal that the recovery plan has yet to gain momentum, and the group is still losing market share amid the price war and a buoyant performance from discounters Iceland, Aldi and Lidl.

Strong sales of party food and patriotic fare for the Queen’s Diamond Jubilee will help Sainsbury’s hold its own in the supermarket price war on Wednesday.

The UK’s third biggest grocer, which operates more than 1,000 stores, was one of the main sponsors of the Thames Diamond Jubilee Pageant and is thought to have benefited more than most of its rivals from the long weekend of celebrations.

It is set to report a strong performance in the 12 weeks to June 9, helping it maintain its share of a highly competitive market. Unlike Tesco, its figures will include the benefit of the long weekend.