Sainsbury’s warns of falling sales as European discounters steal market share

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SAINSBURY’S reported a half year loss and gave a stark warning to the UK supermarket sector that sales will tumble over the next few years as the Big Four battle the impact of European discounters.

Sainsbury’s is to fight back by investing £150m in lowering prices, cancelling plans to build new stores and cutting its dividend. Plans to build an additional 40 stores have been scrapped.

Sainsbury’s, once the darling of the sector, has been hit by the rising popularity of German discounters Aldi and Lidl and has reported falling like-for-like sales over the last three quarters.

The group is hoping to regain ground from the discounters with the launch of a new joint venture with Danish discounter Netto, which will see it build 15 stores in the North of England on Asda and Morrisons’ home turf.

Sainsbury’s new chief executive Mike Coupe said: “We are facing a once-in-a-generation combination of cyclical and structural change in the industry.”

Sainsbury’s admitted that only 75 per cent of its supermarkets are in the right location and the right size. This means that over 100 stores are not in the right place and are expected to have under-utilised space.

Sainsbury’s reported a statutory pre-tax loss of £290m for the six months to September 27, following exceptional charges of £665m. Underlying pre-tax profits fell 6.3 per cent to £375m.

Leeds Station during the afternoon rush hour today. 
Picture: James Hardisty.

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