Summer weather hits sales in-store
Oct 11 2007 by Iain Laing, The Journal
SUPERMARKET group Sainsbury’s has reported a slowdown in sales growth as it battled against poor summer weather and tough competition.
The company, which is currently a takeover target for Qatari-backed Delta Two, said like-for-like sales in the three months to October 6 rose by 3.1%, excluding fuel, down from 5.1% growth in the first three months of the financial year.
The slowdown in the second quarter mirrors similar results from Morrisons and Tesco, as both reported weaker sales against tough comparatives with the World Cup and exceptionally good summer weather last year.
Like-for-like sales in the first half of the year increased by 4%, driven by growth in the number of customer transactions.
Last week Tesco, the UK’s largest supermarket, posted a 3.5% rise in like-for-like sales during the six months to August 25.
The sales figure marks Sainsbury’s 11th quarter of growth under its recovery plan headed by chief executive Justin King.
Mr King said the firm remained ahead of its Making Sainsbury’s Great Again three-year target to grow sales by £2.5bn by March 2008.
Sales are currently £2.3bn ahead, and Mr King said he was confident in Sainsbury’s ability to deliver new space and sales growth during the remainder of the year.
The group, which is the third biggest supermarket in the UK, maintained its “competitive position” during the period as it slashed prices on 7,000 products.
The move came as Tesco and Asda entered a “price war” from the end of June, with both firms cutting their prices in an attempt to win customers as consumers struggled with higher interest rates and declining disposable incomes.
Sainsbury’s also announced plans to make all its own brand tea Fairtrade over the next three years, starting with its 100-year-old Sainsbury’s Red Label tea.
The company did not make any comment on its current takeover situation with Delta Two.
The supermarket opened its books to the potential bidder, which is understood to be preparing a 600p-a-share bid, valuing Sainsbury’s at £10.6bn.
However, according to reports this week, the Sainsbury family, which own around 18% of the group’s shares, could scupper an approach unless a deal is reached with the firm’s pension trustees.
