Newspaper article The Journal (Newcastle, England)

Key Week as Giants Fend off Effects of the Slump; Taking Stock

Newspaper article The Journal (Newcastle, England)

Key Week as Giants Fend off Effects of the Slump; Taking Stock

Article excerpt

AMORE detailed picture of high street trading will emerge this week when Sainsbury's and WH Smith post updates.

Supermarket chain Sainsbury's will issue a keenly awaited second quarter trading update on Wednesday. It will be examined for any evidence that discounters and the economic slowdown are impacting on sales performance, and comes a week after bullish comments from rival Tesco.

Sainsbury's first quarter like-for-like sales growth slowed to 3.4%, down from 4.1% in the previous quarter and below the 5.1% seen this time last year.

Chief executive Justin King revealed most of the sales rise was down to higher prices rather than volume, and said the group was "fighting hard for consumers". Tighter household budgets in recent months have seen the market shares of operators like Aldi and Lidl rise to new highs, with sales at higher end stores like Waitrose and Marks & Spencer slowing accordingly.

Nick Bubb, retail analyst at Pali International, said Sainsbury's relatively up market position meant it was under pressure. He is expecting a 3% rise in like-for-like sales, worse than the 3.9% consensus. Sainsbury's growth for the same period last year was 4%.

A resilient performance from its travel stores should help retailer WH Smith deliver a steady set of full year results this week.

The group's travel division, with 430 sites at airports, stations and motorway service areas, recently saw like-for-like half year sales increase by 3% excluding tobacco - a creditable performance during the consumer spending slowdown. Half year profits at the arm increased by 13% to pounds 17m.

Its performance helped offset a 3% drop in same-store sales for its 546 shops on the high street. High street half-year profits fell by pounds 1m to pounds 50m.

Back in June WH Smith said it was confident of the final year outcome, which analysts believe will result in pre-tax profits of pounds 74m or pounds 75m. …

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