UK retail analysts this afternoon (25 March) praised Sainsbury’s, the country’s third-largest retailer, after it reported accelerating sales growth during the last three months.
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The company, which has seen sales hold up well during the downturn, said like-for-like sales excluding fuel rose 4.5% during the year to 21 March.
Fourth-quarter like-for-like sales excluding fuel were up 6.2%, compared to 4.5% growth during the company’s third quarter to 3 January.
Shore Capital’s Clive Black said Sainsbury’s performance over the year was “very creditable… particularly in a recession”.
Black said: “The company speaks of increased footfall and basket growth, something that may resonate around the market, particularly Tesco, where like-for-like sales growth is materially lower than its more upmarket competitor.”
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By GlobalDataRichard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said Sainsbury’s had gauged the mood of UK consumers “extremely well”.
“It appears that customers’ current quest for value has played into Sainsbury’s hands at the expense of some of its higher priced peers,” Hunter said.
Sainsbury’s has enjoyed success with its “Switch and Save” campaign, has promoted its own-label products against some of the branded lines in its stores.
Chief executive Justin King said sales of Sainsbury’s “entry price-point” Basics range had jumped 60% year-on-year but he claimed the retailer’s customers were also “increasingly concerned” about ethical issues.
“We have worked hard to provide this in our delivery of universal appeal,” King said. “In January we doubled our range of higher welfare pork and all our own-brand pork sausages, including ‘basics’, are made from British meat.”
King added: “In February we became the first major retailer to stop selling eggs laid by battery hens and we have recently expanded the choice of higher welfare chicken with the launch of our new Freedom Food range.”
Black said Shore Capital may have “underestimated” the improvement in Chow Sainsbury’s is viewed by UK consumers searching for value amid the downturn.
“As with Asda and Morrisons, shoppers are becoming more promiscuous. For Sainsbury’s it may, therefore, be the case that it is gaining customers who make an occasional visit and like what they see,” Black said. “In particular they may feel that it is not as expensive as perhaps they initially thought it would be and so they are returning.”
Shares in Sainsbury’s were down 1.5% at 325.75p at 15:59 GMT this afternoon.
