Sainsbury’s Reports Second Consecutive Quarter of Falling Sales

11 Jun 2014 --- Sainsbury’s has reported a drop in like-for-like sales for its first quarter of the year - its second consecutive quarter of a decline in sales – as it faces increasing competition from discount rivals. It’s like-for-like sales (which excludes trading at new stores and fuel) in the 12 weeks to 7 June, were 1.1% lower than the previous year.

"Lower food price inflation and reduced fuel prices are a welcome respite to customers' finances, but they continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade,” said chief executive, Justin King.

However, total sales for the quarter rose by 1%, and Sainsbury’s said it was confident it would outperform its rivals this year. During the quarter the company’s clothing offering recorded double-digit growth while convenience sales also grew, by 18%. Online groceries also fared well with a 10% increase and the company also noted that its entertainment offer also saw ‘good growth’.

The big four supermarkets (Tesco, Sainsbury’s, Morrisons and Asda) are facing increasing competition from lower-cost rivals such as Aldi and Lidl, as well as upmarket chains such as Waitrose. The four have taken action by cutting prices on staple foods such as bread, milk and eggs, in an attempt to claw back market share.

On Tuesday, figures from the British Retail Consortium (BRC) found average food sales on a quarter-on-quarter basis slipped 0.2%, as the major supermarkets cut prices to hold market share and fight off competition from their discount rivals.

Sainsbury’s chief executive Justin King is stepping down in July after 10 years with the company, and he will be replaced by Mike Coupe, the company’s group commercial director.