Sainsbury's toughs out trading challenges
Sainsbury's boosted quarterly sales as the double bank holiday and 'glorious' April weather overcame a challenging consumer climate.
Wedding celebration: Sainsbury's sold nearly 300 miles of bunting and the most champagne ever outside a Christmas period
The supermarket giant reported 1.9% sales growth excluding fuel and the impact of new stores but including VAT in the 12 weeks to June 11.
Tesco yesterday reported an equivalent figure of 1% growth.
Sainsbury's said its customers had celebrated Easter and the Royal Wedding and the warm weather despite the tough economic conditions.
But it warned: 'The market environment remains very competitive, reflecting the challenging economic backdrop. We expect this to be the case throughout the year.'
Shares in the UK's third-largest supermarket rose 0.5p to 327.3p.
The company said general merchandise and clothing grew faster than food - an area in which Tesco is struggling - as it had its best quarter ever for childrenswear.
The royal wedding saw the supermarket sell nearly 300 miles of bunting, 159,000 flags and 49,000 mugs, while it also sold the most champagne ever recorded outside Christmas.
Sainsbury's reiterated yesterday's warning from Tesco that customers are spending more money at the petrol pumps and less on their shopping.
The supermarket said its cheapest Basics brand was the fastest-growing at the store, signalling a move by customers to keep their costs down.
However, Sainsbury's did see growth in its upmarket Taste The Difference range, which was relaunched last September.
The company's drive to expand its convenience store business continued as it delivered 20% growth in the period, while online groceries also grew by 20%.
Sainsbury's opened two new supermarkets in the quarter and 13 convenience stores, as well as replacing one supermarket and extending three others.
View from the City
'Sainsbury is doing something right which Tesco is doing wrong,' said Tom Gadsby of asset manager Matrix. 'A lower non-food exposure helps, but that is only a part of the out-performance.'
'The value range is going well and has a 22% market share (versus 16% overall), and the premium Taste the Difference range is also going very well, echoing Tesco's 10% Finest like-for-like growth yesterday. There is a clearly a bit of a flight to quality, possibly as a replacement for eating out.'
He retained a buy rating on Sainsbury's with a 377p target price.
Investment bank Espirito Santo said the underlying sales picture remained subdued.
'Sainsbury, Morrison and Tesco are all performing as a pack, which has been highlighted by Kantar data over the last few months. As such, Sainsbury is unlikely to regain its momentum premium in the near term.
'We continue to prefer Morrison for superior earnings growth and a more attractive valuation, and Tesco for the international growth opportunity.'
Analysts at Royal Bank of Scotland said Sainsbury's first quarter sales represented a solid start with contributions coming from all parts of its business model.
'Of course, the Easter period would have benefited sales and looking ahead while we expect further solid progress from Sainbury's, the backdrop will remain challenging,' they added.
Most watched Money videos
- BMW's Vision Neue Klasse X unveils its sports activity vehicle future
- Blue Whale fund manager on the best of the Magnificent 7
- How to invest for income and growth: SAINTS' James Dow
- BMW meets Swarovski and releases BMW i7 Crystal Headlights Iconic Glow
- 'Now even better': Nissan Qashqai gets a facelift for 2024 version
- Land Rover unveil newest all-electric Range Rover SUV
- Skoda reveals Skoda Epiq as part of an all-electric car portfolio
- Mail Online takes a tour of Gatwick's modern EV charging station
- Tesla unveils new Model 3 Performance - it's the fastest ever!
- Mercedes has finally unveiled its new electric G-Class
- Mini celebrates the release of brand new all-electric car Mini Aceman
- 2025 Aston Martin DBX707: More luxury but comes with a higher price
- Take That's concert at Co-op Live has moved venue - can I...
- JLR offering £150 a month towards the cost of insuring...
- Wetherspoon's profits buoyed by Guinness boom among...
- Boohoo sales plummet as debts surge
- Saudi Aramco to pay £100bn dividend to help fund city of...
- MP condemn woke ESG debanking as 'legitimate' firms are...
- Direct Line customers faced higher prices in the first...
- Minis new electric Cooper SE tested: Can BMW harness the...
- BUSINESS LIVE: Boohoo sales slump; Wetherspoon's lifts...
- Banks should be forced to disclose why they debank small...
- Zalando has sporting chance of summer boost after...
- Could the Bank of England really cut interest rates this...
- Brewdog founder James Watt steps down to become 'captain'...
- Disney+ streaming service finally turns a profit as cost...
- Tesco uses AI to give millions of Clubcard holders...
- Events planner Informa hikes share buyback scheme to £500m
- Investors pull cash out of UK equity funds for the 35th...
- Boost for City as BP vows to keep its London listing -...