Sainsbury’s sales slump in face of tough competition

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SUPERMARKET Sainsbury’s warned that the market is growing at its slowest pace for nearly a decade as it broke a nine-year run of underlying sales growth.

The group revealed that like-for-like sales excluding fuel slumped 3.1 per cent in the 10 weeks to March 15, marking a sharp reversal of recent fortunes and the first fall after 36 consecutive quarters of rising sales in a row.

Outgoing boss Justin King said the group came up against tough comparatives from a year earlier when it outperformed many rivals amid the horsemeat scandal and benefited from the timing of Mother’s Day and Easter trade.

But he stressed that the market was facing tough conditions in the latest downbeat trading statement from one of the “big four” players as cost-conscious consumers increasingly turn to discounters such as Aldi and Lidl.

He said: “The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers.”

He added: “Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year.”

The group’s fourth-quarter sales decline was steeper with fuel included, falling by 3.8 per cent. Experts at Shore Capital Stockbrokers slashed full-year profit forecasts for Sainsbury’s as they said the sales slide was slightly worse than already- downbeat expectations.

But Sainsbury’s appeared to resist being drawn into the price war waged by its three main rivals to take on the might of the discount chains.

Morrisons last week followed the lead of Tesco and Asda, pledging to invest £1bn over three years after it tumbled to a £176m annual pre-tax loss and warned over results for the year ahead.

The dismal figures from Morrisons sparked a shares rout among listed supermarkets amid worries over a full-blown price war.

All four of the major players have reported sliding sales in recent months, whereas the likes of Aldi and Lidl have benefited.

Tom Dougherty.

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