Sainsbury's share price has risen despite sales falling again

As chief executive Justin King bows out, investors are cheered by rising online and convenience store sales.

by Rachel Savage
Last Updated: 09 Jul 2014

There hasn’t been a lot of good news around for big supermarkets lately, as customers spurn out-of-town megastores for upstart discounters Aldi and Lidl. And, at first glance, Sainsbury’s latest trading update doesn’t look that great either.

Like-for-like sales excluding fuel fell 1.1% in the 12 weeks to June 7, the supermarket’s second consecutive quarter of falling revenues after nine years of unbroken growth. With fuel included, comparable sales dropped 2.4% year-on-year.

However, investors were cheered by Justin King’s relatively upbeat outlook, sending shares up around 2% this morning. The outgoing chief executive said he was ‘confident’ Sainsbury’s would ‘continue to outperform our supermarket peers through the remainder of the year’. With Tesco reporting a third consecutive quarter of falling sales last week, that may not be too difficult.

Sainsburys is also doing well in the increasingly popular areas of convenience stores and online shopping, with sales up 18% and 10% year-on-year respectively. The UK’s third-largest supermarket now has more convenience stores than large ones, with 200 in London alone.

Good news aside, however, the price war between the ‘big four’ (Tesco, Sainsbury’s, Morrisons and Asda) has only just got going and will probably continue to take its toll on Sainsbury’s overall sales.

As King put it, customers ‘continue to spend cautiously, leading to industry growth in the quarter being the slowest in a decade’. King is speaking at the MT Live leadership conference on June 25th, where he can be quizzed about his decade at the supermarket’s helm - and his legacy.

Meanwhile, incoming chief executive, group commercial director Mike Coupe, will have a job on his hands trying to avoid the salvo of calls to resign currently being aimed at Tesco and Morrisons bosses Philip Clarke and Dalton Philips.

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