Sainsbury’s ‘very poor results’ dismay City analysts
The supermarket revealed like-for-like retail sales fell by 2.8% when fuel sales were excluded and by 4.1% when fuel was included during the 16 weeks to September 27.
Total retail sales were down by 0.8%, excluding fuel, and down by 2.3%, including, fuel.
New chief executive Mike Coupe blamed the results on the dynamic and fiercely competitive grocery market. “Clearly, in the past few months, the pace of change in our industry has changed beyond all recognition,” Coupe told BBC Radio 4’s Today programme.
‘Customers are shopping very differently’
“Customers are shopping very differently to the way they were even a year ago. We are seeing an increase in the number outlets available to them and they are shopping much more frequently and little and often.
City analyst Shore Capital slammed the results as “a very poor trading update for the company when set against the sector and where the group has come from over recent years”.
The retailer was suffering from the falling attractiveness of the superstore to an ever growing proportion of the UK population, said its analysts Clive Black and Darren Shirley.
Shore Capital downgraded its profit forecast by 17% but maintained its ‘hold’ advice on the retailer’s stock. The analysts estimated a fall in financial year 2015 retail trading profits of 16%, leading to £763M of group operating profit, pre tax profit of £650M, down 17% and earnings per share of 25.1p.
Planet Retail described the results as a watershed moment, not just for Sainsbury, but for the wider UK grocery industry. Its retail analyst David Gray said: “The sharp decline in like-for-like and total sales at the retailer will send shockwaves across the market. First, it was Tesco, then Morrisons, and now even Sainsbury is reeling from the effects of seismic structural changes rumbling across the UK food sector.
‘No hiding place’
“No-one is immune to the effects and there is no hiding place. This is more akin to long-term climate change than the temporary effects of a perfect storm.”
While discounters, such as Aldi and Lidl, were undoubtedly driving change, other seismic changers were taking place in the UK grocery market, said Gray. “Shifting shopper habits – consumers shopping little and often at convenience stores, smaller online baskets, households wasting less and evaporating hypermarket impulse spend – are all underpinning this shift.”
With sales volumes already worsening and values expected to hit negative later this year in the face of ever-diminishing price inflation, the situation can only worsen, he warned. “All this makes it increasingly likely Christmas will be a complete washout for the UK’s major grocers.”
