Sainsbury targets quality as results beat forecasts

18-Mar-2015 - Last updated on 18-Mar-2015 at 11:58 GMT

Sainsbury reported like-for-like Q4 sales down 1.9%

Sainsbury is nailing product quality goals and plans to boost the rate of product improvements in the coming financial year, according to fourth quarter (Q4) results, which beat expectations.

In a statement on the figures, ceo Mike Coupe said: “We announced in November our commitment to improve the quality of over 3,000 products. We are making good progress with this programme.

“We have recently rolled out improvements to our fresh salmon and Taste the Difference crisp ranges – and the rate at which we launch these innovations will increase in the new financial year.”

Coupe said the supermarket chain had growth in the amount of products it sold across its food business. It also boasted an average uplift of more than 3% on volume sales across the 1,100 products for which it had announced price cuts in its strategic review in November 2014.

‘Food deflation’

“In addition, we have absorbed record levels of food deflation in categories where we trade most strongly – produce, dairy, fresh ready meals, meat, fish and poultry,” said Coupe.

Efforts to shift away from one-off promotions to a policy of daily lower prices had been well received by shoppers, boosting like-for-like transactions in the quarter, he added.

“Growth in our convenience business remains strong at 14% and in the quarter we opened 23 convenience stores,” he claimed.

“Our groceries online business saw order numbers increase by 14%, with a record week of 245,000 orders. By the end of 2015 our customers will be able to Click and Collect their online grocery orders from 100 sites.”

Pressure to lower prices

Coupe said he expected the market to remain challenging. In response to food deflation and competitive pressure to lower prices, which he predicted would persist throughout 2015, he said Sainsbury’s focus on value, quality and its multi-channel offer would enable it to beat rivals.

The supermarket chain reported like-for-like (LFL) sales down 1.9% in the 10 weeks to March 14.

“This contrasts with consensus expectations of -2.7% and is slightly ahead of Sainsbury's guidance of Q4 LFL sales at c.-2.1%,” said Morgan Stanley analysts Edouard Aubin and Francois Halconruy. It posted the same decline in equivalent full-year figures.

For in-depth analysis of the Q4 trading statement, click here.