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| Sainsbury's sales growth hit by price cuts | |
| (about 1 hour later) | |
| Sainsbury's like-for-like sales growth continued to slow in the first quarter after the supermarket group cut food prices to compete with rivals. | |
| The increase for the three months to June compares to 0.9% in the fourth quarter and 1.1% in the three months before. | The increase for the three months to June compares to 0.9% in the fourth quarter and 1.1% in the three months before. |
| Chief executive Mike Coupe said that "the market remains competitive". | Chief executive Mike Coupe said that "the market remains competitive". |
| But he said that Sainsbury's merger with Asda will "create a more resilient and adaptable business for the future". | But he said that Sainsbury's merger with Asda will "create a more resilient and adaptable business for the future". |
| The biggest slowdown in sales was in Sainsbury's groceries division where total revenue rose by 0.5% compared with 2.1% in the fourth quarter and 3% in the same period a year ago. | The biggest slowdown in sales was in Sainsbury's groceries division where total revenue rose by 0.5% compared with 2.1% in the fourth quarter and 3% in the same period a year ago. |
| Sainsbury's said that it has invested £150m to lower prices and has reviewed 51 of its ranges, which make up 27% of its grocery sales. | Sainsbury's said that it has invested £150m to lower prices and has reviewed 51 of its ranges, which make up 27% of its grocery sales. |
| Mr Coupe said: "The headline numbers reflect the level of price reductions we have made in key areas like fresh meat, fruit and vegetables since March." | Mr Coupe said: "The headline numbers reflect the level of price reductions we have made in key areas like fresh meat, fruit and vegetables since March." |
| He added: "Our price position has improved and customers have responded well, resulting in a continuation of the improved volume trend we saw in the second half of last financial year." | |
| But Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "While the top line is just about growing, Sainsbury's efforts to lower prices mean that may not entirely feed through into profits. | |
| Sainsbury's, which also owns the retailer Argos, reported a better performance in its general merchandise and clothing businesses. | Sainsbury's, which also owns the retailer Argos, reported a better performance in its general merchandise and clothing businesses. |
| General merchandise sales rose 1.7% in the three months to June, compared with a 1.2% fall in the fourth quarter and 1% in the comparable quarter in 2017. | General merchandise sales rose 1.7% in the three months to June, compared with a 1.2% fall in the fourth quarter and 1% in the comparable quarter in 2017. |
| Total revenues in clothing increased by 0.8%, up from 0.4% in the previous quarter but far below the 7.2% rise Sainsbury's reported in the first quarter last year. | Total revenues in clothing increased by 0.8%, up from 0.4% in the previous quarter but far below the 7.2% rise Sainsbury's reported in the first quarter last year. |
| Mr Coupe said: "General merchandise and clothing, including Argos, continue to outperform a very challenging market and we are well placed to further grow market share." | Mr Coupe said: "General merchandise and clothing, including Argos, continue to outperform a very challenging market and we are well placed to further grow market share." |
| Total sales across Sainsbury's rose by 0.8%. | Total sales across Sainsbury's rose by 0.8%. |
| Merger financing | Merger financing |
| Sainsbury's is currently in talks with Asda to create the UK's largest supermarket group, which would see it leapfrogging current leader Tesco if the deal goes ahead. | Sainsbury's is currently in talks with Asda to create the UK's largest supermarket group, which would see it leapfrogging current leader Tesco if the deal goes ahead. |
| Both supermarkets have said that a combination would allow them to lower prices "by around 10% on many of the products customers buy regularly". | Both supermarkets have said that a combination would allow them to lower prices "by around 10% on many of the products customers buy regularly". |
| Emma-Lou Montgomery, associate director at Fidelity Personal Investing, said: "Going forward, Sainsbury's bosses are clearly pinning their hopes on the newly-created supermarket behemoth, that a merger with Asda would create, bulldozing its way through this relentlessly competitive sector." | |
| Mr Coupe has also said that the deal would not lead to store closures or job losses in stores. | Mr Coupe has also said that the deal would not lead to store closures or job losses in stores. |
| In its announcement on Wednesday, Sainsbury's said that it had agreed a financing package of £3.5bn in relation to the proposed merger. | In its announcement on Wednesday, Sainsbury's said that it had agreed a financing package of £3.5bn in relation to the proposed merger. |
| It also said that it remains on track to achieve £200m in cost savings this year. | It also said that it remains on track to achieve £200m in cost savings this year. |
| Shares in Sainsbury's rose by 0.44% to 318.6p in early trading. | Shares in Sainsbury's rose by 0.44% to 318.6p in early trading. |