Sainsbury's Christmas sales slip as outlook remains "challenging"

 
Jessica Morris
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Sainbury's Christmas sales disappointed (Source: Getty)

Festive cheer failed to save supermarket Sainsbury's as it reported third quarter sales which were the worst in a decade.

Like-for-like sales in stores open for more than a year fell 1.7 per cent in the 14 weeks to January 3, excluding fuel.

Despite this, sales actually beat expectations, with analysts forecasting a drop between 2.5-4.4 per cent, according to Reuters.

Sainsbury's share price fell 1.1 per cent to £2.32 in late morning trade.

The future outlook remains "challenging" amid an uncertain trading environment, continued food price deflation and the price cuts announced earlier this week, the grocer said.

Sainsbury's also expects fourth-quarter like-for-like sales to be in-line with its first half.

Mike Coupe, chief executive of Sainsbury's, said:

Sainsbury's has provided a great Christmas for our customers. Food price deflation and falling fuel prices have enabled our customers to treat themselves over the festive period.

Sainsbury's, one of the big four supermarkets, has suffered amid a changing retail landscape. Customers' shopping habits are different, food prices are falling and there's also increased competition from German discounters Aldi and Lidl.

But today's share price rise suggest investors think there's still hope for the struggling supermarket.

Phil Dorrell, director of retail consultancy Retail Remedy, said:

Like-for-like sales slump aside, there is a lot Sainsbury's does right. It has smaller stores than its competitors, a strong convenience business, a solid online proposition and some of the best own-label stats in the business. Taste the Difference is really starting to make a difference.

If it concentrates on these qualities and sticks to the basics in the medium-term, it may well emerge in better shape than many expect.

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