UK supermarket company J Sainsbury has reported slower sales growth for its fiscal fourth quarter, which it has attributed to too much emphasis on cutting costs.
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At its UK Sainsbury’s supermarket chain, like-for-like sales growth for the fourth quarter to the end of March was 1.3% including petrol sales and adjusted for last year’s earlier Easter holiday. Like-for-like sales excluding petrol were down 1.1%.
“During our recovery programme we have to balance the need for profit growth with sales growth whilst incurring significant costs in implementing our business transformation programme. With hindsight in quarter four we probably went too far in reducing promotions and operating costs to achieve the profit target, at the expense of sales, in what turned out to be a soft market,” said CEO Peter Davis.
Like-for-like sales at the company’s US Shaw’s supermarkets increased 0.3% in the fourth quarter, adjusted for Easter.
“In slower markets in both the UK and the US we have delivered steady sales during the year while making significant progress with our business transformation programme in the UK. In addition we will deliver £200m of cost savings and expect to achieve the double-digit profit growth target for this year, giving profits that are in line with consensus market expectations,” Davis continued.
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By GlobalData“In the UK huge progress has been made on our business transformation programme, which has entered its intensive implementation phase. We have opened 2 of our 4 new automated depots and are beginning to build up capacity. We have installed new electronic point-of-sale equipment and in-store computer systems in 308 stores and 129 petrol filling stations. In this quarter we have also opened eight new supermarkets, 11 Local stores, delivered nine extensions and four refurbishments.
“We enter the new year with renewed focus on service in-store, our fresh food offer and, this autumn, the re-launch of our non-food offer to drive sales momentum.
“In the US Shaw’s has performed well despite challenging economic conditions and has delivered better like-for-like sales growth than many of its US peers.
“We remain confident that we are making real progress across the group to achieve our targets. Our profit margins and sales continue to improve, our ambitious infrastructure renewal programme in the UK is on track and we are achieving our planned cost savings,” Davis said.
