18th Mar 2014 08:01
LONDON (Alliance News) - British supermarket chain J Sainsbury PLC Tuesday reported a 1.5% drop in sales in the fourth quarter, and a steep decline of 3.8% in like-for-likes sales, in stark contrast to stable sales growth in the previous quarter, and a strong Christmas trading period.
The UK's third largest grocer said it expects the outlook for customers to continue to be challenging for the coming year.
In its Christmas trading update, Sainsbury's cut its sales guidance for the current financial year, warning that although it had seen customers splurge in the run-up to Christmas, October and November had been very slow, and the current quarter was also looking tough as consumers reign in spending after a splurge at Christmas. It said at the time, that it expected like-for-like sales growth for the year to dip below 1%, down from its previous sales guidance of between 1% and 1.5%.
In a trading statement for the fourth quarter Tuesday, the grocer reported a 1.5% drop in total sales for the 10 weeks to March 15, with sales down 1.0% excluding fuel.
On a like-for-like basis, sales fell by 3.8%, and were down 3.1% excluding fuel.
"We have seen a decline in sales in the quarter reflecting tough comparatives. This time last year our sales benefited significantly from the discovery of horsemeat in some branded and competitors' product. We are pleased, however, that market data shows we have maintained market share at 17%," said Chief Executive Justin King in a statement.
King said the later timing of Easter and Mother's Day, which fall in quarter one of its new financial year, and unseasonable weather have also contributed to lower market growth year-on-year.
Sainsbury's driving forces and growth areas remain online and convenience stores. It said its convenience store business grew by 15% in the quarter, and during the quarter saw one million transactions in a day.
Its general merchandise and clothing business also continue to perform well, with particularly strong growth in menswear of over 23% year-on-year.
In its half year report in November, the retailer said that its general merchandise arm was growing at twice the rate of its food business.
Sainsbury's said it opened approximately one million square feet of new space over the year, including 22 convenience stores during the quarter. This brings a total for the year of 13 new supermarkets, 91 convenience stores and 6 extensions. It also refurbished a further 54 stores.
During the quarter Sainsbury's acquired the remaining shares of Sainsbury's Bank from Lloyds Banking Group PLC, and now fully owns the bank, with the transition process on track as planned, it said.
The supermarket recently said that Chief Executive Justin King will step down in July after 10 years at the helm, and will succeeded by Mike Coupe, currently the group's commercial director.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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