Sainsbury's 9-year sales growth ends

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Sainsburys

Reuters.

London - Britain's J Sainsbury ended a nine-year run of quarterly sales growth on Tuesday, underlining the tough trading momentum for the country's major grocers in the early months of 2014 and a tough comparative figure from last year.

The group, which trails market leader Tesco and is battling with Wal-Mart Stores' Asda to be the UK's No. 2 grocer, said sales at stores open over a year fell 3.1 percent, excluding fuel, in the 10 weeks to March 15, its fiscal fourth quarter.

That compared to a rise of 3.6 percent in the same period last year, analysts' forecasts in a range of down 2-3 percent and growth in the third quarter of 0.2 percent.

Prior to the fourth quarter Sainsbury's had reported like-for-like sales growth for 36 straight quarters.

“Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year,” the company said, adding however that it expected to outperform its peers.

Britain's economic recovery is fragile and its grocery market is growing at its slowest rate since 2005.

The “big four” grocers are all being outpaced by sales growth at German-owned discounters Aldi and Lidl, while upmarket chains Waitrose and Marks & Spencer are also trading ahead of the pack.

Last week No. 4 grocer Morrisons posted its lowest annual profit for five years, issued a huge profit warning and sparked fears of an industry price war after saying it would invest 1 billion pounds ($1.7 billion) in price cuts over three years to win back customers who have switched to discounters.

It's statement wiped off over 2 billion pounds from the stock market value of UK grocery retailers.

Sainsbury's said it was confident its differentiated offer, which includes its Nectar loyalty card and “Brand Match” pricing scheme, would allow it to outperform peers in the year ahead.

The firm's total fourth quarter sales fell 1.0 percent, excluding fuel.

Sales at its convenience stores grew at over 15 percent, though online sales growth slowed to 6 percent, reflecting a reduction in marketing while the new customer website was launched.

Shares in Sainsbury's, down 21 percent over the last six months, closed Monday at 311.4 pence, valuing the business at 5.93 billion pounds. - Reuters


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