Sainsbury's fourth quarter sales beat market forecasts

Sainsbury unveiled strong fourth quarter results on Tuesday as the supermarket saw customer transactions grow to a record 22.9m per week.

Sainsbury unveiled strong fourth quarter results on Tuesday as the supermarket saw customer transactions grow to a record 22.9m per week.

The grocer's total sales for the 10 weeks to March 16th jumped 7.1%, driven in part by quality control amid a Europe-wide horsemeat scandal.

Sainsbury was the only one of the four largest UK supermarkets, which also include Tesco, Asda and Morrison, to increase its market share last month after the Food Standards Agency ruled its beef products were free of horsemeat.

Like-for-like sales for the fourth quarter rose 4.2% while like-for-like sales for the year climbed 2.1%, beating analysts' estimates. Jefferies International had predicted a 2.2% growth for the quarter and a full-year incline of 1.6%.

Weekly customer transactions increased by over 800,000 year-on-year and 22.9m per week.

"We have delivered strong sales in the fourth quarter, increasing market share and outperforming in what remains a tough retail environment," said Chief Executive Officer, Justin King.

"Our focus on quality is an important reason why customers choose to shop with us, and why we are seeing strong growth in our own-brand products."

He said sales have risen around 9.0% year-on-year as the re-launch of Sainsbury's own brand range nears completion.

The company's Brand Match has also proven a big hit. The initiative allows customers to compare the price of Sainbury's brands against rival supermarkets. Clients receive a coupon at the till if they can show they could have bought a comparative brand for a lower price at Tesco or Asda.

"Brand Match (originally launched in October 2011) has certainly resonated in addressing Sainsbury's perceived weak price offering," Jefferies said.

The group has also heavily invested in its supply chain, including its work with farmer development groups to ensure the fresh supply of chicken and beef.

Sainsbury's convenience business is growing at over 18% year-on-year, boosted by new space and strong like-for-like sales.

The firm added 163,000 square feet of new space, comprising three supermarkets and 19 convenience stores during the quarter. Over the year, the company added 14 supermarkets, eight extensions and 87 convenience stores, bringing the total gross new space to just over 1.0m square feet, up about 5.0%, in line with targets.

Online grocery shopping increased sales by nearly 20% year-on-year. The general merchandise and clothing business is mounting at nearly three times the rate of food, reaching a milestone £1.0bn worth of annual sales in February and a record 19% year-on-year increase in sales for the month of January.

"We now regularly serve over 190,000 customers a week with customer service and availability scores at an all time high," King said.

"We expect the challenging economic environment to continue through the coming year. By helping our customers to 'Live Well for Less' through our ongoing commitment to great quality own-brand products, Brand Match, competitive pricing and targeted promotions via Nectar and coupon-at-till, we are well positioned to continue to outperform the market."

RD

Recommended

Share tips of the week – 30 September
Share tips

Share tips of the week – 30 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Sep 2022
The best British tech stocks from a thriving sector
Share tips

The best British tech stocks from a thriving sector

Move over, Silicon Valley. Over the past two decades the UK has become one of the main global hubs for tech start-ups. Matthew Partridge explains why,…
29 Sep 2022
These 3 top value stocks offer
Share tips

These 3 top value stocks offer

Professional investor Adam Rackley of Cape Wrath Capital highlights three overlooked value stocks to buy.
29 Sep 2022
Three top-notch Asian stocks to buy
Share tips

Three top-notch Asian stocks to buy

Professional investors Adrian Lim and Pruksa Iamthongthong, managers of the Asia Dragon Trust, pick three of their favourite Asian stocks to buy now.
23 Sep 2022

Most Popular

The best British tech stocks from a thriving sector
Share tips

The best British tech stocks from a thriving sector

Move over, Silicon Valley. Over the past two decades the UK has become one of the main global hubs for tech start-ups. Matthew Partridge explains why,…
29 Sep 2022
Share tips of the week – 30 September
Share tips

Share tips of the week – 30 September

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Sep 2022
Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022