Slowdown in Sales Growth Fuels Fears over Sainsbury's Recovery
Nigel Cope City Edtior, The Independent (London, England)
J SAINSBURY, Britain's second-largest supermarket operator, reported a slowdown in sales growth yesterday, with the performance dented by an end of its deal with Air Miles. The news caused a 7.4 per cent fall in the shares to 287p as some analysts expressed concern about the strength of the group's recovery.
At its annual shareholders' meeting yesterday, Sainsbury's said that in the 12 weeks to 22 June underlying sales, excluding petrol, were up by 2.7 per cent on the same period the previous year. In May the group's chief executive, Sir Peter Davis, had warned that sales growth would slow as it ended its contract with the Air Miles frequent flyer programme.
Sir Peter said this has knocked 1 per cent from the like-for- like sales figure. Sainsbury's is part of a new loyalty scheme called Nectar, which includes BP, Debenhams and Barclaycard and is due to be launched in the autumn.
He said the whole market was slowing and that it was difficult to judge the impact of declining stock markets on consumer confidence. "Food retailing is generally not affected by slowdowns as people tend to eat out less and eat at home more," he said. "But I can't believe people's confidence about their investments [in the stock market and in pensions] will not have an impact. …