Sainsbury’s new chief executive has admitted the supermarket’s sales are unlikely to rise this year for the first time in a decade amid a fiercely competitive supermarket war.
Mike Coupe, who replaced Justin King this year, revealed that sales fell faster in the past three months than the previous quarter and warned: “It’s not where we’d want to be and it is clearly hard out there. This is probably the most-challenging period of trading I’ve seen in the industry in 30 years.”
Like-for-like sales for the three months to September 27 fell 2.8 per cent, compared with a year ago, meaning the first half of the year saw a 2.1 per cent drop.
Large stores suffered worst, with sales down between 3 per cent and 4 per cent, but the UK’s third-largest supermarket was helped out by its convenience stores and online businesses, which were up 17 per cent and 7 per cent.
The latest business news
Some investors are worried that the falling sales and plummeting share price, which is down 30 per cent this year, could force the supermarket to cut its dividend.
The shares lost 3.8 per cent to 241.9p, a six-year low.
However, finance chief John Rogers said: “We’re not making any changes on our dividend today, but we are holding a comprehensive review of the whole business. We do review our dividend policy on a continued basis.”
Coupe said that no area of the business was off limits for the review, which he will reveal next month at the company’s interims, but he warned responding to discounters Aldi and Lidl was key.
He said: “There is a reality in our market place which shows discounters will grow and we need to respond to those trends.”
Sainsbury’s has managed to ride out the wave of recent attacks by discounters into the traditional Big Four (with Tesco, Asda and Morrisons) market share. However, today’s revelation that like-for-like sales will remain the same for the rest of the year shows that Sainsbury’s is now losing out.
Coupe suggested: “We have a perfect storm — the effect of customers shopping around, we’ve seen deflation in the market for the first time in a generation and we are beginning to see customers eating out again, which is a post-recessionary effect.”
In a week of drama for the supermarkets sector, following Tesco’s discovery of a £250 million black hole in its accounts, Coupe said that Sainsbury’s had investigated its own accountancy policies.
Tesco — which today revealed it was now the subject of a full investigation by the Financial Conduct Authority — said some supplier payments had been booked into the wrong trading period, but Coupe said: “We double checked and I am 100 per cent confident of the integrity of our accounts.
“We are built on a foundation of trust and have a great relationship with our suppliers,” he added.Reuse content