Sainbury's has reported steady growth in sales during the first quarter of 2013, as the grocer continues to outperform rival Tesco.
Like-for-like sales at Sainsbury's were up 0.8% in the 12 weeks to 8 June, marking the 34th consecutive quarter of growth for the UK's third biggest supermarket.
This marks a slowdown compared to bumper sales growth of 3.6% in the fourth quarter of 2012, but contrasts starkly with the fortunes of the UK's biggest supermarket Tesco, which last week reported a 1% fall in sales as the horsemeat scandal put a chill on its sales of ready meals.
Sainsbury's, which was not caught out selling unlabelled horsemeat in its products, also reported that sales of its upmarket Taste the Difference range had been growing at 10% to reach £1bn in sales.
According to Kantar, Sainsbury's increased its market share by 0.2% to 16.8% over the quarter. Justin King, chief executive of Sainsbury's, who last week was awarded a 23% pay rise taking his overall remuneration to £4.3m, said it was a solid performance in a tough consumer environment.
He acknowledged that sales growth had slowed compared to "exceptionally strong performance" in the fourth quarter, when Sainsbury's picked up sales from rivals hit by the horsemeat scandal.
King said he expected sales to vary from quarter to quarter, as consumers save their money for special occasions.
The outlook was likely to remain challenging, he said, as shoppers wait for the good weather to splash out.
"If we get a spell of sustained warm weather I fully expect consumers to be reasonably buoyant in their spending but if we get a spell of bad weather, which I am sure we will because it is summer, then I think we will see consumers ratchet back their spending, so they have [money] to spend when the sun is shining. And that pattern has been with us for a number of years."
The grocer, which opened 19 new convenience stores in the last quarter, said it was on course to open two convenience stores a week for the rest of the year. It also plans to open 10 or 12 supermarkets, although King said these would not be the big-box superstores with large non-food ranges favoured by rival supermarkets.
"We have always felt a 120,000 sq ft out-of-town store was not the right choice for us or our customers," he said.
"The challenges others are facing are largely in the parts their real estate that are very large and dominated by non-food and often non-food that has very little relevance to a grocery customer."
Tesco has been hit by a sharp decline in non-food sales, such as TVs and electronics, where competition from internet retailers such as Amazon is fierce. Clive Black, head of research at Shore Capital, said Sainsbury's could expect further growth at modest rates.
But he added: "The bigger issue is the extent to which Sainbury's can translate sales growth into profit and earnings growth and they have struggled to do that in recent years and that could be problematic going forward."
This difficulty reflected "the high cost of competing in the UK grocery market", as the UK's big four supermarkets face intensifying competition from discounters Aldi and Lidl, as well as premium stores Waitrose and Marks and Spencer.
"The market is very tough. People are being very careful in how they are buying food, more so than other categories," he said. "The big four players are really slugging it out."
guardian.co.uk
Like-for-like sales at Sainsbury's were up 0.8% in the 12 weeks to 8 June, marking the 34th consecutive quarter of growth for the UK's third biggest supermarket.
This marks a slowdown compared to bumper sales growth of 3.6% in the fourth quarter of 2012, but contrasts starkly with the fortunes of the UK's biggest supermarket Tesco, which last week reported a 1% fall in sales as the horsemeat scandal put a chill on its sales of ready meals.
Sainsbury's, which was not caught out selling unlabelled horsemeat in its products, also reported that sales of its upmarket Taste the Difference range had been growing at 10% to reach £1bn in sales.
According to Kantar, Sainsbury's increased its market share by 0.2% to 16.8% over the quarter. Justin King, chief executive of Sainsbury's, who last week was awarded a 23% pay rise taking his overall remuneration to £4.3m, said it was a solid performance in a tough consumer environment.
He acknowledged that sales growth had slowed compared to "exceptionally strong performance" in the fourth quarter, when Sainsbury's picked up sales from rivals hit by the horsemeat scandal.
King said he expected sales to vary from quarter to quarter, as consumers save their money for special occasions.
The outlook was likely to remain challenging, he said, as shoppers wait for the good weather to splash out.
"If we get a spell of sustained warm weather I fully expect consumers to be reasonably buoyant in their spending but if we get a spell of bad weather, which I am sure we will because it is summer, then I think we will see consumers ratchet back their spending, so they have [money] to spend when the sun is shining. And that pattern has been with us for a number of years."
The grocer, which opened 19 new convenience stores in the last quarter, said it was on course to open two convenience stores a week for the rest of the year. It also plans to open 10 or 12 supermarkets, although King said these would not be the big-box superstores with large non-food ranges favoured by rival supermarkets.
"We have always felt a 120,000 sq ft out-of-town store was not the right choice for us or our customers," he said.
"The challenges others are facing are largely in the parts their real estate that are very large and dominated by non-food and often non-food that has very little relevance to a grocery customer."
Tesco has been hit by a sharp decline in non-food sales, such as TVs and electronics, where competition from internet retailers such as Amazon is fierce. Clive Black, head of research at Shore Capital, said Sainsbury's could expect further growth at modest rates.
But he added: "The bigger issue is the extent to which Sainbury's can translate sales growth into profit and earnings growth and they have struggled to do that in recent years and that could be problematic going forward."
This difficulty reflected "the high cost of competing in the UK grocery market", as the UK's big four supermarkets face intensifying competition from discounters Aldi and Lidl, as well as premium stores Waitrose and Marks and Spencer.
"The market is very tough. People are being very careful in how they are buying food, more so than other categories," he said. "The big four players are really slugging it out."
guardian.co.uk
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