Sainsbury’s sales slip in ‘tough’ supermarket environment

Sainsbury’s sales fell in its latest quarter, the supermarket revealed today, as boss Mike Coupe warned of the consequences of a no-deal Brexit.

Like-for-like sales slipped 1.6 per cent year on year for the four months to the end of June while retail sales dropped 1.2 per cent, piling pressue on Coupe after the supermarket’s proposed Asda merger was blocked.

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Meanwhile clothing revenue declined 4.5 per cent compared to the same period last year and general merchandise sales also faltered, dipping 4.1 per cent.

Grocery sales also fell 0.5 per cent.

“We continue to adapt our business to changing shopping habits and made good progress in a challenging market,” Coupe said.

“In a tough trading environment, we gained market share in key general merchandise categories and in clothing, where we are now the UK’s fifth largest retailer by volume.”

However, Sainsbury’s warned that the merchandise and clothing markets “remain challenging”, and blamed “poor weather” for some seasonal categories.

And the supermarket’s declines in like-for-like sales and retail sales contrast with growth of 0.2 per cent and 0.8 per cent a year ago.

Meanwhile Coupe also warned that retail markets “remain highly competitive” and said the consumer outlook “continues to be uncertain” ahead of the UK’s deadline to leave the EU on 31 October.

Coupe warned that the Halloween deadline is “bang in the centre” of Sainsbury’s plans to prepare for Christmas.

“You couldn’t choose a worse date,” he told press on a conference call.

“We import a lot of electrical goods like tech and TVs– you don’t have to go very far to see the kind of categories that would be disrupted [by a no-deal Brexit].”

Tory leadership frontrunner has committed to a “do or die” Brexit in which the UK quits the bloc regardless of whether it has a deal by the current deadline.

Meanwhile Sainsbury’s ceded more market share to rivals in the three months to June as discounters Aldi and Lidl continued to boost their own stakes, according to recent data.

The figures pile more pressure on Coupe, who resisted calls to resign in the aftermath of Sainsbury’s blocked £12bn merger with Asda in late April.

The Competition and Markets Authority ruled that the tie-up, which Sainsbury’s had sought to combat industry pressures, would harm consumers by reducing competition.

Sainsbury’s spent £46m on the failed acquisition, contributing to a £42m blow to profits last year.

Coupe vowed to invest in 400 supermarkets this year in a bid to upgrade beauty offers in 100 stores and accelerate investment in technology to improve the shopping experience.

Russ Mould, investment director at AJ Bell, said it is hard to see how Sainsbury’s will bounce back from its failed merger with Asda.

“There is still a sense that Sainsbury’s doesn’t really know what it wants to be,” he said, pointing to Coupe’s focus on both non-food sales and its own-brand food.

“Without a unique selling point it will be hard to have clear marketing strategies, targeting the right type of people and commanding customer loyalty.

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“A business lost at sea is just going to drift, either bobbing along until it reaches an unknown destination or it will sink.”