Sainsbury reports LFL sales down ‘thanks to horsemeat’

LFL sales, excluding fuel, fell by 1%, while total sales dipped by 1.5% or by 1% excluding fuel.

Justin King blamed the results partly on last year’s horsemeat crisis. “We have seen a decline in sales in the ​[fourth] quarter reflecting tough comparatives. This time last year our sales benefited significantly from the discovery of horsemeat in some branded and competitors’ products.”​

But market data showed the retailer had maintained its market share at 17%, despite flagging food sales. “The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers,” said King. “The later timing of Easter and Mother’s Day, which fall in quarter one of our new financial year, and unseasonable weather have also contributed to lower market growth year-on-year.”​

Growth in own-label ranges​

Sainsbury said it continued to see growth in own-label ranges, significantly ahead of branded products. The retailer’s own-label products now accounted for 51% of sales compared with market figures of 47%. King claimed the store’s own-label products were, on average, 20% cheaper than branded equivalents, while continuing to deliver the values its customers expected.

The week after Morrisons pledged to slash prices in a bid to battle discounters Aldi and Lidl, the Sainsbury boss said the retailer was lowering prices to shoppers while continuing to pay sustainable prices to suppliers. “We recently lowered the price of our milk, bread and eggs, but continue to pay a fair price to farmers through our Dairy Development Group, and only use British flour in our in-store bakeries and eggs from hens that are free to roam,” ​said King.

Convenience business​

Growth in the retailer’s convenience business remains strong at more than 15% and for the first time, recorded 1M transactions in a day in the fourth quarter. “As well as opening around two new stores per week, we are part way through a programme to refit produce equipment in existing stores, responding to customer demand for more fresh food,” ​said King.

Meanwhile, Sainsbury’s groceries online business was growing at 6% year-on-year, reflecting a reduction in marketing while the new customer website is launched. The roll-out of the online business is now 80% finished, with completion due next month.