Pain for Sainsbury's: Shoppers switch to discount rivals

Justin King, J Sainsbury's chief executive, will reveal this week the extent to which the supermarket has been dented by the consumer slowdown and fierce competition from discount rivals such as Aldi and Lidl.

Wednesday's trading statement is expected to show like-for-like sales growth of around 4 per cent, but analysts will be looking for any indication that it is losing out to its competitors.

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"Switching data suggests that Sainsbury's has not fared well in terms of share loss over the summer, losing ground to Tesco and Morrisons in particular," warned James Collins, analyst at Deutsche Bank.

Slapping a sell recommendation on the stock, Caroline Gulliver, analyst at Execution, said: "Without much sales growth, Sainsbury's plan to increase operating margins much above 3 per cent looks like a big ask and greater cost cuts are not easy."

Sainsbury's shares closed down 1.5 per cent on Friday at 329.5p – off their one-year high of 587.5p.