Sainsbury’s: Welcome cheer over profit outlook

Supermarket giant Sainsbury’s delivered some welcome cheer from the under-pressure supermarket sector as it increased its profit outlook for the year after narrowing sales falls.
Sainsbury's expecting a sunnier profit outlook.Sainsbury's expecting a sunnier profit outlook.
Sainsbury's expecting a sunnier profit outlook.

The chain posted a 1.1 per cent drop in like-for-like second-quarter sales, excluding fuel - its seventh quarter of falling sales in a row.

But the decline was better than the 2.1 per cent fall seen in the previous three months and Sainsbury’s said it saw the number of sales and transactions rise, while it added that lower average basket spend in supermarkets continued to stabilise.

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The group now expects full-year profits to be “moderately” ahead of the £548m expected in the City, although this is still a sharp fall from the £681m reported the previous year.

The Big Four supermarkets have been squeezed amid a fierce price war as they fight back against the increasing popularity of discounters Aldi and Lidl.

But Sainsbury’s said it was being buoyed by its turnaround programme of price cuts and promotions, with better-than-expected sales and cost savings in its second quarter.

Mike Coupe, chief executive of Sainsbury’s, said: “During the quarter we saw an improvement in our key trading metrics. Both volume and transactions grew as the decline in average basket spend in supermarkets continued to stabilise.

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“Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy.”

Earlier this month Morrisons posted a 2.4 per cent fall in second quarter like-for-like sales, while in August Asda reported a 4.7 per cent slump in underlying sales for its first quarter. Tesco will update on its second quarter on October 7.