Newspaper article The Journal (Newcastle, England)

Sainsbury's Return to Growth Is Interrupted

Newspaper article The Journal (Newcastle, England)

Sainsbury's Return to Growth Is Interrupted

Article excerpt

Byline: HOLLY WILLIAMS BUSINESS writer business@ncjmedia.co.uk @Jnlbusiness

SAINSBURY'S has posted a fall in sales as it remains under pressure amid a supermarket price war and sent out a warning about "challenging" trading.

Britain's second biggest supermarket reported a 0.8% drop in like-for-like sales excluding fuel for the 12 weeks to June 4. The fall marks a setback after a return to quarterly like-for-like growth for the first time in more than two years the previous three months, when sales edged 0.1% higher.

Mike Coupe, chief executive of Sanisbury's, said: "Market conditions remain challenging. "Food price deflation continues to have an impact on our sales and pressures on pricing mean the market will remain competitive for the foreseeable future." Sainsbury's recently began scrapping multi-buy promotions and has ditched its brand-match guarantee in favour of overall lower prices.

The first-quarter update comes as the group's PS1.4bn takeover of Argos owner Home Retail Group faces scrutiny from the competition watchdog.

The Competition and Markets Authority said last month it was looking into whether the tie-up with Argos owner Home Retail could result in a "substantial lessening of competition". It will consider comments on the deal and decide whether to launch an inquiry by July 25.

Mr Coupe said he was "as confi-dent as we can be" that the Home Retail deal will be cleared in the Competition and Markets Authority's initial inquiry, with the group adding that it remains on track to complete the takeover in the third quarter.

He insisted the group's decision to end multi-buy deals was not denting trade, with the number of customer transactions up on a like-for-like basis. He admitted the decline in first-quarter sales was a "slight step back", but said the chain would stick to its strategy and continue to lower everyday prices. …

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