Sainsbury sales show best rise in 10 years

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J Sainsbury, the supermarket chain, reported its best quarterly sales figures for a decade yesterday, but then disappointed the City with the news that this level was unsustainable.

Like-for-like sales were 6 per cent ahead for the 12 weeks to 23 June, excluding petrol. Delivering a trading update, the company said that it was starting to see a recovery, after years of losing market share, as a result of increased marketing and more competitive prices.

The sales performance was the best for at least 10 years, with quarterly like-for-like growth in the last four years more typically coming in at just 0.5 per cent.

Sir Peter Davis, chief executive, said: "Overall, I think we have seen a combination of circumstances that were very favourable and it's unlikely they will continue at that level in the foreseeable future. We would expect the market growth rate to decline in the next quarter."

He said his three-year plan to turn the company around was on track. But Sir Peter added that as store refurbishments are stepped up, additional costs and disruption would hit sales. During the second quarter, 37 revamps and three store extensions are planned among the group's 450-strong chain.

Sir Peter's gloomier remarks pushed the company's shares close down nearly 5 per cent at 407p.