Sainsbury’s third quarter results for the 14 weeks to January 2014 have defied the expectations of City analysts.
Shore Capital’s Clive Black and Darren Shirley said they were “pleased and relieved” to see Sainsbury’s continue to post positive like-for-like sales (excluding fuel) – albeit a small growth of 0.2 per cent.
The supermarket’s total sales for the third quarter rose by 2.5 per cent (or by 2.7 per cent excluding fuel), while like-for-like sales remained flat.
Analysts across the country had low expectations for the Christmas sales in the retail sector - blighted in part by the storms - but Sainsbury’s confirmed that they processed 28 million customer transactions in the seven days leading up to Christmas.
Justin King, chief executive officer of Sainsbury’s, admitted that trading in the first two months of the third quarter had been particularly slow.
He said: “This quarter has been characterised by a very tough sales environment throughout October and November, with customers saving up in order to treat their families over the Christmas period.
“However, we saw strong sales in the key period over Christmas, helping record numbers of customers to ‘live well for less’. Like-for-like sales excluding fuel of 0.2 per cent, coupled with a strong contribution from new space, led to our best Christmas ever.”
Shore Capital analysts noted that the British Retail Consortium-Nielsen Shop Price Index recorded food inflation in November of 1.7 per cent – down from 2.3 per cent in October. This meant that the big supermarkets were likely to be losing market share and suffering negative volumes.
Mr Black and Mr Shirley suggested that this was “unchartered territory for the industry, as hard discounters, premium retailers and specialists win”.
They also acknowledged “a very strong” recent trading performance announced today (January 8th) from Waitrose and the John Lewis Partnership, with like-for-like sales in the five weeks to Christmas Eve up by 3.1 per cent.
Shore Capital expects Sainsbury’s to announce pre-tax profits of between £795-800 million.
Justin King has pledged his commitment to remain at the helm of Sainsbury’s for the short-term. He old the BBC Radio 4’s Today programme: “I’ve said that I’m closer to the end of my time than the start. But I still have plenty of legs left in me yet.”