Sainsbury’s sales grow at sluggish pace

SAINSBURY’S followed its arch-rival Tesco in unveiling lethargic first quarter sales growth yesterday, weighed down by low food inflation and a challenging consumer environment.

Like-for-like sales for the first quarter grew at their slowest rate in five years, just 1.1 per cent, excluding fuel sales, which jumped due to inflammatory oil price pressures. Including petrol, like-for-like sales rose 4.6 per cent, while overall group sales rose 7.6 per cent.

Including the effect of VAT returning to its normal 17.5 per cent rate after the previous government’s temporary cut, the supermarket’s growth came in at just 0.3 per cent – marginally ahead of Tesco, which on Tuesday said VAT-adjusted like-for-like sales inched up 0.1 per cent in the first three months of the year.

Chief executive Justin King remained bearish on the outlook for the consumer environment, which he expects to “remain challenging”, compounded by the austerity measures due to be introduced in the emergency Budget next week.

However, Sainsbury’s figures were boosted by strong online grocery sales, which grew by just under 20 per cent, and a jump in the number of customers using the firm’s Nectar loyalty card scheme.

Sainsbury’s also enjoyed a positive impact from a couple of weeks of sales of its World Cup range, including the controversial South African vuvuzela horns.