Sainsbury's sales edge up

City A.M. Reporter
Sainsbury's posted an expected rise in second-quarter underlying sales as store extensions and growth in convenience stores, online and non-food ranges helped it to overcome tough trading conditions.

The group, which trails Wal-Mart's Asda and market leader Tesco by annual sales, said on Wednesday sales at stores open over a year rose 1.9 per cent in the 16 weeks to 1 October, excluding fuel, but including VAT sales tax.

That compared with a forecast rise of 1.8 per cent in a Reuters poll of analysts and followed an increase of 1.9 per cent in the first quarter.

Britons are suffering the biggest squeeze on disposable incomes for decades due to rising food and fuel prices, muted wages growth and government austerity measures.

Stripping out the impact of higher prices on their sales, supermarket groups are seeing a fall in volumes, meaning shoppers are even cutting back on groceries – traditionally the most resilient area of consumer spending.

Sainsbury's has grown sales faster than Asda and Tesco in recent quarters, helped by its expansion drive.

Adjusted for changes in VAT tax, Sainsbury's underlying sales are likely to have been up around 1.1 percent.

That is better than the 0.7 per cent drop reported by Tesco on Wednesday for its second-quarter ending 27 August, but below the 2.2 per cent posted by smaller rival Wm Morrison for the six months ended July.

Sainsbury's said it expected the market environment to remain very competitive for the foreseeable future but was confident in its ability to grow.