Sainsbury’s sales hit by slowing growth

SAINSBURY’S has reported its smallest rise in underlying quarterly sales in almost five years.
Britain’s third biggest grocery chain said stores open at least one year rose 1.7 per cent, excluding fuel, in the fourth quarter.

That was down from 3.7 per cent in its third quarter and the smallest rise since the first quarter of its 2005-6 financial year, but just above an average forecast for a rise of one to 1.5 per cent.

The company, which has 525 supermarkets and 300 convenience stores, faces a tough environment. Industry data earlier this month indicated Sainsbury’s growth had slipped behind larger rivals Tesco and Asda.

But chief executive Justin King yesterday insisted that sales would pick up.

He said: “While we expect the consumer environment to remain challenging in 2010, our universal customer appeal together with our accelerated growth of space for new supermarkets, extensions and convenience stores means we are well placed to make continued good progress.”

King said average weekly customer numbers were up one million at 19m and sales of general merchandise goods – a key focus for growth – rose at three times the rate of food, or about 12 per cent, led by clothing and homewares.

Total sales including new selling space – another key focus for the company – rose 7.1 per vent, or 4.4 per cent excluding fuel.

Sainsbury said it remains comfortable with analyst forecasts for 2009-10 and 2010-11; £595m and £655m respectively. Sainsbury’s reports full year results in May.