Sales figures pick up at Sainsbury's

Sainsbury's continued its recovery yesterday when it announced encouraging news on current trading. Speaking at the company's annual general meeting in central London, Sainsbury's chairman, David Sainsbury, said total sales in the 16 weeks to the end of June were 8.3 per cent ahead of the same period last year.

Stripping out new store openings, the like-for-like sales figure is 4.2 per cent.

The shares rose 11.5p to 399.5p on the news. This is their highest level since January and shows a continued recovery since the shares sank to 309p in February following the supermarket group's disastrous profits warning.

Analysts said the trading statement was encouraging though the figures were still some way below sales increases announced by rivals such as Asda and Tesco. "It's steady as she goes," said one analyst. "The shares have risen more out of relief than anything. But things are gradually getting a bit better at Sainsbury's and the shares have rallied strongly."

Sainsbury's said its increase was despite a decline in sales inflation, which is now less than 1 per cent, mainly because of lower prices for fruit and vegetables. Mr Sainsbury said: "Our sales growth has continued to exceed industry averages. We expect to sustain like-for-like sales growth above inflation in the year ahead."

However, he cautioned that sales inflation may fall further until late summer. He also said the company was starting to come up against tougher sales comparisons as it had passed the anniversary of the launch of its Reward loyalty card.

The company said gross margins were stable. Like-for-like sales in the Homebase DIY group were 9 per cent ahead though kitchen sales were poor.

Sales at SavaCentre and Shaw's, the US business, are in line with the figure at the year end. It is thought that Sainsbury's may see a potential impact of pounds 10m to pounds 20m from the changes to employers' pension contributions announced in last week's Budget.