Wed, Jul 05, 2017 - Page 10 News List

Sainsbury’s beats forecasts, in spite of tough market

Reuters, LONDON

Sainsbury’s CEO Mike Coupe speaks during a panel session at the 61st Global Summit of the Consumer Goods Forum in Berlin on June 22.

Photo: Bloomberg

Sainsbury’s, Britain’s second-biggest supermarket group, saw its sales growth accelerate in its latest quarter, helped by inflation and a spate of warm weather, though it cautioned trading conditions remained tough.

Sainsbury’s and its major rivals — market leader Tesco, Asda and Morrisons — are grappling with the rapid growth of German discounters Aldi and Lidl, and having to deal with more expensive food imports due to the post-Brexit vote fall in the value of the pound.

“The market is competitive and we continue to manage cost price pressures closely,” chief executive Mike Coupe said.

“Our strategy is delivering and we are well placed to navigate the external environment,” he said.

Sainsbury’s said group retail like-for-like sales rose 2.3 percent, excluding fuel, in the 16 weeks to July 1, its fiscal first quarter.

That compares with analysts’ average forecast of a rise of 2 percent and growth of 0.3 percent in the previous quarter.

This was the first quarter following the Home Retail purchase for which the group did not issue separate like-for-like sales data for Sainsbury’s and Argos.

Sainsbury’s said total grocery sales rose 3 percent, while transactions at the supermarket were up 1.9 percent.

General merchandise sales increased 1 percent

The group said online grocery sales increased 8 percent, while sales at convenience stores were up 10 percent.

Prior to yesterday’s update analysts were on average forecasting a pretax profit of £572 million (US$741 million) for 2017 to 2018, down from 581 million in 2016 to 2017. Such an outcome would represent a fourth straight year of profit decline.

Shares of Sainsbury’s, up 5 percent over the past year, closed on Monday at £2.49, valuing the business at 5.5 billion.

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