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Sainsbury maintains growth record as grocer outpaces rivals
Sainsbury maintains growth record as grocer outpaces rivals

Sainsbury maintains growth record as grocer outpaces rivals

RETAILER NEWS

Bloomberg - Jun 12th 2013, 14:06

J Sainsbury Plc (SBRY), the U.K.’s third-largest supermarket chain, reported a 34th successive quarter of same-store sales growth as the grocer increased its share of the market while its main competitors all lost ground.  

Sales at stores open at least a year rose 0.8 percent, excluding revenue from fuel, in the 12 weeks ended June 8, London-based Sainsbury said today. The median estimate of 12 analysts compiled by Bloomberg News was for 0.9 percent growth.

Sainsbury’s revenue gain contrasted with declines reported most recently by Tesco Plc (TSCO) and William Morrison Supermarkets Plc (MRW), helped by its premium Taste the Difference brand, which is growing at more than 10 percent, and a 20 percent increase in convenience-store sales.

Still, same-store sales growth slowed from the previous quarter’s 3.6 percent, partly on comparisons with a period of last year that benefited from purchases related to celebrations of the Queen’s Diamond Jubilee.

“Sainsbury continues to outperform peers on like-for-like momentum,” James Grzinic, an analyst at Jefferies International Ltd., said in a note. “Non-food, convenience and dotcom all remain highly accretive to the group’s growth profile.”

Sainsbury was little changed at 362.5 pence at 10:19 a.m. in London trading. The shares have gained 5 percent this year.

Sainsbury was the only one of the four biggest U.K. grocers to gain market share on an annual basis in the 12 weeks through May 12, controlling 16.8 percent of the market compared with 16.5 percent a year earlier, Kantar Worldpanel said May 21.

Tesco Decline

Market leader Tesco saw its share decline to 30.2 percent from 30.8 percent. Wal-Mart Stores Inc. (WMT)’s Asda chain declined to 17.2 percent from 17.4 percent and Morrison to 11.6 percent from 11.9 percent as shoppers turned to discounters such as Aldi and Lidl and upscale chains including Waitrose.

The Taste the Difference range of premium foods, introduced by the grocer in 2000, has now reached 1 billion pounds ($1.6 billion) of annual sales, Sainsbury said. Growth was also helped by sales of non-food items, which increased at more than twice the pace of food in the quarter, it said.

The strongest gains were achieved in convenience stores and online groceries, where sales rose more than 16 percent. Without these, same-store sales of food were lower in the quarter, Philip Dorgan, an analyst at Panmure Gordon, estimated.

“We think that this indicates that Sainsbury should be doing more to reduce space growth than it currently is,” Dorgan said in a research note.

New supermarkets

Sainsbury plans to open 10 to 12 new supermarkets this year. As these will be in parts of the country where it isn’t present, “we’re confident that the new space will continue to perform for the company,” King said on a conference call.

Extensions to existing stores added 0.2 percent to same-store sales growth in the first quarter, the company said.

Sainsbury expects a “challenging” economic climate for the rest of the year, King said.

Customers are only “marginally less negative than they have been in recent times,” King said. “I don’t think we should be getting carried away,” by better economic data.

The U.K. economy will grow through 2015 faster than previously forecast, the British Chambers of Commerce said May 31, while consumer confidence rose to a six-month high in May.

Chief Financial Officer John Rogers today reiterated the company’s forecast for growth of 1 percent to 1.5 percent in same-store sales for the full financial year.
From Bloomberg 

Read more about: tesco | sainsbury | retail sales | grocery chain |

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