Sainsbury’s has attributed a drop in sales in the third quarter of 2018 to “cautious customer spending”.
Like-for-like retail sales, excluding fuel, fell 1.1% for the 15 weeks to 5 January 2019, with general merchandise sales declining 2.3% and clothing by 0.2%.
Grocery sales fared better, growing 0.4%, with online and convenience up 6% and 3% respectively. Groceries online also performed better, with 20% of group sales, including Argos, beginning online.
Like-for-like sales from Argos stores open for over a year in Sainsbury’s supermarkets increased 10% year on year, and sales using its Fast Track service were up 8%.
Chief executive Mike Coupe said the fall in sales was down to a decision to reduce promotional activity, adding it had been “very thoughtful, cautious and sensible about how we managed our pricing, and have come out of Christmas pretty clean as a result”.
“I am pleased with the excellent service and availability we gave customers,” said Coupe. “Sainsbury’s stores were well set up to deal with customers doing their big Christmas shops later than usual and convenience stores hit a new record on Christmas Eve. Sainsbury’s is focused on offering distinctive food at great prices - grocery sales were solid across the quarter and our price position versus our competitors improved, with our £9 turkey crowns and 30p vegetables proving particularly popular.”
He disregarded concerns that a fall in service and availability last summer was having a lasting impact on business and customer perception. “Availability was identical to last year, and we measure it day by day and hour by hour,” he said. “There’s been no lasting damage or challenge and we’re managing this through a very turbulent time.”
Coupe said Sainsbury’s level of confidence in its £15bn merger with Asda was at the same level as when it was first announced last April. “Nothing has changed. We’ve provided detailed responses to the Competition & Markets Authority (CMA) and remain confident in the deal and its ability to give customers lower prices. We have not taken our eye off the ball; there are about 20 people working on the deal and our attention remains on providing great products and service.”
Hargreaves Lansdown equity analyst George Salmon called the results “disappointing”, and said the “relentless rise of the discounters” has brought Sainsbury’s market share under pressure despite its efforts to hold prices down.
Catherine Shuttleworth, CEO at shopper and retail marketing agency Savvy, said: “There’s lots for the business to focus on to get back on point, including improving perception on in-store availability. However the real concern has to be general merchandise sales and lack of customer spending on discretionary items.”