Sainsbury positive despite slowest sales growth in five years

Falling food prices mean slower sales growth for Sainsbury's - but there are signs of progress.

by
Last Updated: 06 Nov 2012

Sainsbury's was the latest supermarket to report its quarterly results this morning, and as far as UK sales were concerned, the story was virtually identical to Tesco yesterday. Like Tesco, Sainsbury saw sales growth slump in the 12 weeks to June 12 - the like-for-like increase of 1.1% was Sainsbury's lowest in five years - thanks largely to falling food prices. And like Tesco, the retailer warned of an uncertain outlook for consumer spending. Unlike Tesco, however, Sainsbury's can't rely on international sales to pick up the slack. So investors will have been cheered by good news on new stores and non-food sales - including, much to our chagrin, those infernal vuvuzelas...

Sainsbury boss Justin King said its latest figures represented 'another good performance ahead of the market', pointing to Kantar figures that suggested it was taking market share from its biggest rivals. But although pricier petrol boosted the overall sales number by 7.6%, there's no doubt that the like-for-like figure (once you strip out fuel) looks rather disappointing compared to recent highs. Still, it's hardly a surprise: all the supermarkets have been warning that lower food prices (as opposed to last year, when they were soaring) would take a bite out of sales growth this year. Higher petrol costs don't help grocery sales either.

And Sainsbury did have some successes to celebrate today. 17m people now have a Nectar card, making it the biggest loyalty scheme in the UK. It's apparently now the biggest retailer of British asparagus and Jersey royals - part of its ongoing PR-friendly commitment to British farming. Online food sales - although still small compared to the big boys - grew by nearly 20%. And its new store space is apparently delivering higher-than-expected sales.

So, some cause for optimism for Sainsbury's, even though UK sales growth is likely to remain pretty lacklustre for the rest of this year. But our eye was caught by one particular titbit, when King was bigging up the the performance of its non-food offering. Apparently World Cup fever is starting to boost sales - and Sainsbury's said it's already flogged 50,000 vuvuzelas, the African plastic horns whose never-ending drone has been by far the most irritating aspect of the tournament so far. 50,000... If we have to endure that racket after the World Cup too, Sainsbury's will have a lot to answer for.


In today's bulletin:

We will make BP pay, says Obama (but what about everyone else?)
No cause for cheer as unemployment hits 2.47m
Sainsbury positive despite slowest sales growth in five years
A Traveller’s Tale: Recessionary Rome is remarkably robust
Is Tesco right to promote from within?

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