Sainsbury hits 12-month low after poor Christmas sales

SAINSBURY'S disappointed the stock market yet again yesterday when it revealed a poor sales performance over Christmas and admitted that its high-profile "Value to Shout About" advertising campaign, starring John Cleese, had failed to meet expectations.

Sainsbury's shares plunged by more than 8 per cent to a 12-month low of 393p as the supermarket group said underlying sales in the 19 weeks to 30 January were up by just 1.2 per cent on the same period last year. This compares to a figure of 4.1 per cent announced by Tesco last month, indicating that Sainsbury's is continuing to lose ground to the market leader.

Sainsbury's chief executive, Dino Adriano, said that although the Cleese campaign had succeeded in attracting more customers to the stores, it had not encouraged them to spend more. Instead they had focused only on the promoted, cut-price ranges, leaving Sainsbury's with a lower average transaction size.

"Shoppers were just popping in, picking up the bargains and going elsewhere," one analyst said.

The result is that not only has the price campaign failed to stimulate sales, but it has reduced margins as well.

Sainsbury's would not comment on whether it would continue to use the services of Mr Cleese. But it is considered unlikely that the comedian's contract will be renewed following suggestions that Sainsbury's has found the former Monty Python star too expensive and difficult to work with.

Sainsbury's was forced to deny rumours that it is planning a major strategic review, and suggestions that Mr Adriano is ill. "Our strategy remains unchanged, and Dino looked perfectly well last time I saw him," a spokesman said.

Analysts criticised the company, saying its management team had moved too slowly to act on prices and was still being outmanoeuvred by rivals such as Tesco, Asda and a recovering Safeway, whose trading update is due on Monday.

"This business seems no closer to solving the problem of how to grow sales in an environment of falling margins than it was five years ago," said Andrew Fowler, food retail analyst at Morgan Stanley.

Market share figures compiled by AGB show that in December Sainsbury's share of the UK grocery market was 16.1 per cent, compared to 20.2 per cent held by Tesco. Two years ago Sainsbury's was much closer, with 17.1 per cent compared to Tesco's share of 19.3 per cent.

Analysts have cut their current-year profit forecasts to around pounds 750m. Some sector watchers suggest there are parallels between the plight of Sainsbury's and that of Marks & Spencer, another dimming high-street star.

They said that Sainsbury's was paying the price for an "arrogant inward- looking attitude" that was proving difficult to shake off. "Sainsbury's just does not have a culture that learns quickly," one analyst said.

Sainsbury's has been caught out in an ever more price-competitive supermarket environment, as is illustrated by the current price war on bread, with some supermarkets cutting the cost of a sliced white loaf to just 7p.

Its trading statement showed that underlying sales at Savacentre were up by just 0.4 per cent. Homebase, the DIY chain, did better with a 4.3 per cent rise.

Travel
travel
News
Tim Vine has won the funniest joke award at the Edinburgh Festival 2014
peopleTim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
News
Jamie and Emily Pharro discovering their friend's prank
video
Arts and Entertainment
Taylor Swift crawls through the legs of twerking dancers in her 'Shake It Off' music video
musicEarl Sweatshirt thinks so
PROMOTED VIDEO
News
Our resilience to stress is to a large extent determined by our genes
science
Travel
travel
Arts and Entertainment
tv
Sport
sportBesiktas 0 Arsenal 0: Champions League qualifying first-leg match ends in stalemate in Istanbul
News
Pornography is more accessible - and harder to avoid - than ever
news... but they still admit watching it
Arts and Entertainment
The eyes have it: Kate Bush
musicKate Bush asks fans not to take photos at London gigs
News
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Extras
indybest
Sport
Manchester United are believed to have made a £15m bid for Marcos Rojo
sportWinger Nani returns to Lisbon for a season-long loan as part of deal
News
news
News
i100
Arts and Entertainment
O'Toole as Cornelius Gallus in ‘Katherine of Alexandria’
filmSadly though, the Lawrence of Arabia star is not around to lend his own critique
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Database developer (SQL, T-SQL, Excel, SSRS, Crystal rep

£25000 - £30000 per annum + bonus+benefits+package: Harrington Starr: Junior D...

Java/Calypso Developer

£600 - £800 per day: Harrington Starr: Java/Calypso Developer Java, Calypso, ...

Quantitative Developer

£700 per day: Harrington Starr: Quantitative Developer C++, Python, STL, R, PD...

Web developer (C#, MVC4, HTML5, CSS3, Javascript, Jquery)

£30000 - £44000 per annum + Bonus+Benefits+Package: Harrington Starr: Web deve...

Day In a Page

Ferguson: In the heartlands of America, a descent into madness

A descent into madness in America's heartlands

David Usborne arrived in Ferguson, Missouri to be greeted by a scene more redolent of Gaza and Afghanistan
BBC’s filming of raid at Sir Cliff’s home ‘may be result of corruption’

BBC faces corruption allegation over its Sir Cliff police raid coverage

Reporter’s relationship with police under scrutiny as DG is summoned by MPs to explain extensive live broadcast of swoop on singer’s home
Lauded therapist Harley Mille still in limbo as battle to stay in Britain drags on

Lauded therapist still in limbo as battle to stay in Britain drags on

Australian Harley Miller is as frustrated by court delays as she is with the idiosyncrasies of immigration law
Lewis Fry Richardson's weather forecasts changed the world. But could his predictions of war do the same?

Lewis Fry Richardson's weather forecasts changed the world...

But could his predictions of war do the same?
Kate Bush asks fans not to take photos at her London gigs: 'I want to have contact with the audience, not iPhones'

'I want to have contact with the audience, not iPhones'

Kate Bush asks fans not to take photos at her London gigs
Under-35s have rated gardening in their top five favourite leisure activities, but why?

Young at hort

Under-35s have rated gardening in their top five favourite leisure activities. But why are so many people are swapping sweaty clubs for leafy shrubs?
Tim Vine, winner of the Funniest Joke of the Fringe award: 'making a quip as funny as possible is an art'

Beyond a joke

Tim Vine, winner of the Funniest Joke of the Fringe award, has nigh-on 200 in his act. So how are they conceived?
The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

The late Peter O'Toole shines in 'Katherine of Alexandria' despite illness

Sadly though, the Lawrence of Arabia star is not around to lend his own critique
Wicken Fen in Cambridgeshire: The joy of camping in a wetland nature reserve and sleeping under the stars

A wild night out

Wicken Fen in Cambridgeshire offers a rare chance to camp in a wetland nature reserve
Comic Sans for Cancer exhibition: It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans

Comic Sans for Cancer exhibition

It’s the font that’s openly ridiculed for its jaunty style, but figures of fun have their fans
Besiktas vs Arsenal: Five things we learnt from the Champions League first-leg tie

Besiktas vs Arsenal

Five things we learnt from the Champions League first-leg tie
Rory McIlroy a smash hit on the US talk show circuit

Rory McIlroy a smash hit on the US talk show circuit

As the Northern Irishman prepares for the Barclays, he finds time to appear on TV in the States, where he’s now such a global superstar that he needs no introduction
Boy racer Max Verstappen stays relaxed over step up to Formula One

Boy racer Max Verstappen stays relaxed over step up to F1

The 16-year-old will become the sport’s youngest-ever driver when he makes his debut for Toro Rosso next season
Fear brings the enemies of Isis together at last

Fear brings the enemies of Isis together at last

But belated attempts to unite will be to no avail if the Sunni caliphate remains strong in Syria, says Patrick Cockburn
Charlie Gilmour: 'I wondered if I would end up killing myself in jail'

Charlie Gilmour: 'I wondered if I'd end up killing myself in jail'

Following last week's report on prison suicides, the former inmate asks how much progress we have made in the 50 years since the abolition of capital punishment