Sainsbury's biggest FTSE riser as share price soars by most since 2009 as sales fall by less than expected

Clara Guibourg
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Despite fierce competition, the supermarket chain is expecting its full year results to be "moderately ahead of published consensus" (Source: Getty)

It comes to something when a dip in sales is embraced rapturously by investors - but Sainsbury's shareholders were thrilled as the supermarket suggested full-year profits will be ahead of expectations.

The figures

Sainsbury's like-for-like sales in the quarter to the end of September, it said, with sales excluding petrol dipping 1.1 per cent. That was "moderately" better than analysts' forecast of 1.3 per cent. Last quarter sales at the supermarket chain dropped 2.1 per cent.

It was a morning of moderates: the supermarket said it is now expecting full-year underlying profit before tax to be "moderately ahead of published consensus".

Sainsbury's shares soared by 14.4 per cent on the figures, the most since 2009. The soaring stocks, which have been struggling over the past year, made Sainsbury's the FTSE's biggest riser.

Why it’s interesting

Competition is relentless in the UK's grocery sector and few were expecting an upbeat report from Sainsbury's, as the “Big Four” have been struggling to compete with cut-price supermarket rivals Lidl and Aldi, pushing them into a price war.

Sainsbury's has not been left unaffected by this, nor food price deflation, and in May, the company broke nine years of uninterrupted sales growth to report a pre-tax loss of £72m.

However, a recent Kantar report showed Sainsbury's was alone among the Big Four not to have lost market share to the German discounters.

What Sainsbury's said

Mike Coupe, Sainsbury's chief executive, said:

Both volume and transactions grew as the decline in average basket spend in supermarkets continued to stabilise. While the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy.

As we continue to reduce our promotional activity in favour of lower regular prices, we are improving the accuracy of our demand forecasting. This is driving better availability and lower than expected levels of waste.

In short

Sainsbury's continues to struggle to keep up with relentless competition from discounters Aldi and Lidl as well as Amazon Fresh and online shopping, but these latest sales figures give cautious cause for optimism.

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