Sainsbury's Reports Solid Sales Growth

Thu, 09 Oct 2008

Supermarket group Sainsburys has posted sales growth ahead of expectations for the second quarter.

The retailer yesterday delivered total sales up 8.4 per cent for the 16 weeks to 4 October, with like-for-like sales, excluding fuel, up 4.3 per cent. City analysts had been expecting underlying sales growth of 3.9 per cent.

The strong growth was driven by robust sales of non-food, "refocused" promotions, and customers switching to buying Sainsbury's cheaper own-label products instead of popular brand names, as well as larger product packs.

Chief executive Justin King said the solid performance was testament to the "strength and broad appeal" of the retailer's brand in a tough trading environment .

"During the quarter we continued to develop our offer to help customers manage tighter budgets without the need to sacrifice food quality," he said. "Customers have responded well and transaction numbers continue to grow."

He added that non-food sales were growing at nearly three times the rate of food sales, while sales of its Basics range were up 30 per cent. The grocer said it had expanded the number of products in its Basics range to 550 to meet consumers' growing demand for own-brand lines.

King said he expects trading environment to remain challenging throughout the second half but stressed that "the Sainsbury's offer" had been developed "to perform in these conditions".

He also claimed that Sainsbury's was increasing its market share by "stealing very successfully" from its upmarket grocery rivals, M&S and Waitrose, while at the same time hold of its shoppers and stopping them defecting to discount stores such as Aldi and Lidl .