By Kathy Gordon
LONDON--J Sainsbury PLC (SBRY.LN) reported subdued third-quarter
sales growth Wednesday, underscoring how even the best-performing
UK supermarkets are struggling against declining volumes and new
shopping habits.
The company said same-store sales rose 0.9% excluding Value
Added Tax and fuel in the 14 weeks to Jan. 5, a slowdown from 1.9%
growth in the second quarter. Wm Morrisons Supermarkets PLC
(MRW.LN) Monday reported a sales drop of 2.5% and Tesco PLC
(TSCO.LN) is expected to report sales growth of around 1%
Thursday.
Tellingly though, Tesco is comparing 2012 sales to last year's
profit warning-inducing 2.7% decline, whereas Sainsbury's was up
against a 2.1% rise last year.
Sainsbury Chief Executive Justin King said sales were boosted by
its extensive online operations and 500 convenience stores, the two
fastest-growing channels in the grocery sector, the lack of which
has proved to be Morrisons' undoing.
Still, Sainsbury's growth rate was the slowest since 2005 and
Mr. King blamed shoppers trading into its cheaper own-brand ranges,
reflecting hard-pressed customers' propensity to seek out value in
unbranded products or discount retailers which were the clear
Christmas winners.
Figures from Kantar published Tuesday showed German discounters
Aldi and Lidl gaining market share and growing at 30% and 10%
respectively in the 12 weeks to Dec. 25.
The picture emerging from the key Christmas period as more
retailers report festive sales is muted. December sales from the
British Retail Consortium showed a 0.3% rise in like-for-like
sales, and the market is evenly split amongst the winners, like
Next PLC (Retail sales up 3.9%) and Debenhams PLC DEB.LN (five week
sales up 5%), and losers like Morrisons and music retailer HMV
Group PLC (HMV.LN) which is forecast to report retail sales down 8%
next week, according to Seymour Pierce.
The overwhelming consensus from retail chief executives is that
the forthcoming year will be a similarly low-growth picture.
Constrained shoppers remain under pressure from rising inflation
and are searching out bargains and saving up for special occasions,
which will make the already competitive landscape even more
cut-throat, putting sales and profits under increasing
pressure.
Still to Report:
Jan 10: Marks & Spencer Group PLC; Tesco PLC
Jan 15: Ocado Group PLC
Jan 17: Home Retail Group PLC; AB Foods PLC; Dixons PLC
Jan 24: Carphone Warehouse Group PLC
Feb 7: Supergroup PLC
Write to Kathy Gordon at kathy.gordon@dowjones.com
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