LONDON--J Sainsbury PLC (SBRY.LN) on Tuesday reported lower
same-store sales for the fourth quarter, while warning that the
year ahead remained challenging as it battles falling prices and
stiff competition.
For the 10 weeks through March 14, Sainsbury reported a 1.9%
fall in same-store sales, excluding fuel. Total retail sales on
this basis fell 0.3%.
Chief Executive Mike Coupe said Sainsbury has "absorbed record
levels of food deflation," adding that he expects this to persist,
which along with competitive pressures will likely continue to
impact prices.
The company didn't give sales or profit figures on Tuesday.
Sainsbury had previously warned that profit for the second half
of the year would be lower than for the first half as the retailer
pumped more money into price cuts to defend its market share from
discount chains such as Aldi and Lidl that are winning market
share.
The U.K.'s biggest supermarkets have all been cutting prices to
compete against the discounters, whose limited product range allows
them to offer lower prices.
Sainsbury on Tuesday said it saw volume growth across its food
business, rising by over 3% on average across 1,100 products on
which it has cut prices. Like rival Tesco PLC (TSCO.LN), Sainsbury
has been working to simplify the shopping experience, as
bewilderingly large ranges and choppy pricing strategies are seen
to have driven customers into the arms of the discounters. Tuesday,
Mr. Coupe said the company's bid to replace one-off promotions with
consistently lower prices has been well received by customers.
According to most recent data from consumer research group
Kantar Worldpanel, Sainsbury's market share slipped 0.5% for the 12
weeks to March 1, while Aldi and Lidl gained 19% and 14%
respectively from a year ago. During that same period, rival Tesco
posted its strongest performance in 18 months, with sales up 1.1%
from a year earlier.
Shore Capital analyst Darren Shirley recently warned than
Tesco's gains could hurt Sainsbury. "We are particularly concerned
for Sainsbury's that Tesco may get its act together," said Mr.
Shirley, adding that the retailer had materially benefited from
Tesco's under-performance.
For the year ended March 2015, analysts expect pretax profit,
after stripping out one-time items, of 659 million, according to
Sainsbury's website.
-Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com
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