Sainsbury's (SBRY) has capped off a year of turmoil for the UK's supermarkets with better than expected fourth-quarter trading.
Like-for-like retail sales fell 1.9 per cent, excluding fuel, beating consensus forecasts of a 2.3 per cent decline. Chief executive Mike Coupe said the trading environment remained "challenging" and that food price deflation would persist for the rest of the year as supermarkets slash prices in the ongoing battle for customers. Sainsbury has cut prices on more than 1,100 lines since November. That seems to be resonating with shoppers: Volumes on these lower-priced goods grew 3 per cent in the quarter. The convenience business continued to gather pace, too, growing sales by 14 per cent, while online order numbers also jumped 14 per cent.
The news follows data from market research firm Nielsen which suggests sentiment is improving in the sector. Volumes at the UK's leading supermarkets increased 1 per cent year-on-year in the four weeks to 28 February - the third consecutive month of growth following 17 months of decline.
"Lower commodity prices, more retailer price cuts and ongoing promotions continue to make grocery shopping cheaper than it was last year," says Mike Watkins, Nielsen’s UK head of retailer and business insight. "This is now leading to sustained volume growth, suggesting the consistent decline in supermarket sales that characterised last year may finally be over. It’s realistic to expect we’ll see a sustained period of shoppers buying higher volumes."
Despite that, Wm Morrisons (MRW) was the only one of the big four supermarkets not to see a decline in year-on-year sales in the four-week period. Asda was the worst performer, followed by Sainsbury and Tesco (TSCO). Aldi’s sales grew 16 per cent, and Lidl's 13 per cent, but their market share remained at 10.7 per cent.
