Sainsbury's hails solid sales performance

Sainsbury's hailed a solid sales performance in a challenging environment today as it benefited from Easter, the royal wedding and record-breaking weather.

The UK's third biggest supermarket recorded 1.9% sales growth excluding fuel and the impact of new stores but including VAT in the 12 weeks to June 11. Tesco yesterday reported an equivalent figure of 1% growth.

The company said general merchandise and clothing grew faster than food - an area in which Tesco is struggling - as it had its best quarter ever for childrenswear and became the number one retailer for the DVD of Oscar-winner The King's Speech.

The royal wedding saw the supermarket sell nearly 300 miles of bunting, 159,000 flags and 49,000 mugs, while it also sold the most champagne ever recorded outside Christmas.

Sainsbury's focus on rapid expansion and general merchandise - or non-food sales - has paid off over the last year as it frequently delivered stronger like-for-like growth than its rivals.

Supermarkets and the wider retail sector in the UK have been hit by a squeeze on consumer spending as high inflation couples with muted wage growth.

Sainsbury's reiterated yesterday's warning from Tesco that customers are spending more money at the petrol pumps and less on their shopping.

The supermarket said its cheapest Basics brand was the fastest-growing at the store, signalling a move by customers to keep their costs down.

However, Sainsbury's did see growth in its upmarket Taste The Difference range, which was relaunched last September.

The company's drive to expand its convenience store business continued as it delivered 20% growth in the period, while online groceries also grew by 20%.

Sainsbury's opened two new supermarkets in the quarter and 13 convenience stores, as well as replacing one supermarket and extending three others.

Tom Gadsby, analyst at Matrix Group, said today's figures suggest "Sainsbury is doing something right which Tesco is doing wrong."

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