UK retail group Sainsbury’s has posted an upbeat trading statement for the second quarter, ahead of the publication of its interim results on 15 November.
The company said that total sales for the second quarter were up by 7.6%, and 8% excluding petrol, while like-for-like sales were up 6.5%. The company said its recovery remains “on track”.
“We have continued our good sales performance during the second quarter of the year and have benefited from spells of good weather and the focus this places on fresh and healthy food,” said CEO Justin King. “We have now reported like-for-like sales growth for seven consecutive quarters.”
Sainsbury’s also had some good news for investors regarding current cost pressures in the grocery sector. “As has been widely reported, this quarter has seen some significant pressure in the market driven by increases in the cost of energy, commodities and fresh produce,” King said. “Our grocery inflation for the quarter was significantly lower than the overall market at 1.0% and therefore our relative price position continued to improve during the period. For the first half, prices were, in total, at the same level as the first half last year.”
King said that the company’s ‘Try Something New Today’ branding initiative had passed its first anniversary in September, and the programme was “strengthening our brand’s heritage and focus on fresh, healthy and tasty food”.
Sainsbury’s also said that it had relaunched its premium ‘Taste the Difference’ (TTD) range during the quarter, introducing some 250 new products bringing the total range to 1,100 lines. The company’s Wheel of Health nutritional labelling now appears on TTD products and is being introduced into the ‘Basic’ product range at the beginning of next year, Sainsbury’s said. “This will continue to help customers make informed decisions in achieving a balanced diet throughout our product range,” King added.
However, although the trading statement was generally upbeat, there was a warning about cost pressures in the second half.
“As previously announced, we will experience a significant step up in our energy costs of around GBP55m (US$102m) in the second half,” King said. “We also face much tougher sales growth comparatives as we come up against the strong trading performance of over 5% like-for-like growth achieved in the second half of 2005/06. We believe the market will remain highly competitive but our performance in the first half has given us good momentum as we enter the important Christmas trading period.”