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| Sainsbury's warns outlook 'challenging' as sales fall | Sainsbury's warns outlook 'challenging' as sales fall |
| (about 1 hour later) | |
| Sainsbury's has warned the outlook for the rest of the financial year will "remain challenging" after reporting a drop in like-for-like sales over the key Christmas trading period. | Sainsbury's has warned the outlook for the rest of the financial year will "remain challenging" after reporting a drop in like-for-like sales over the key Christmas trading period. |
| The supermarket chain said sales at stores open at least a year fell 1.7% excluding fuel in the 14 weeks to 3 January. | The supermarket chain said sales at stores open at least a year fell 1.7% excluding fuel in the 14 weeks to 3 January. |
| Total sales fell 0.4%. | Total sales fell 0.4%. |
| However, Sainsbury's said the week before Christmas was a "record", with 29.5 million customer transactions. | However, Sainsbury's said the week before Christmas was a "record", with 29.5 million customer transactions. |
| The latest figures were also an improvement on the previous quarter, when like-for-like sales excluding fuel fell 2.8%, and were better than analysts' expectations of a drop in like-for-like sales of 2.5-4.4%. | The latest figures were also an improvement on the previous quarter, when like-for-like sales excluding fuel fell 2.8%, and were better than analysts' expectations of a drop in like-for-like sales of 2.5-4.4%. |
| Sainsbury's shares, which have fallen 36% over the past year, rose 1.3% following the trading update. | |
| Local shopping | Local shopping |
| Sainsbury's chief executive Mike Coupe said he expected like-for-like sales in the fourth quarter to be similar to its first half performance due to "the uncertainty in the trading environment, food price deflation and price reductions". | Sainsbury's chief executive Mike Coupe said he expected like-for-like sales in the fourth quarter to be similar to its first half performance due to "the uncertainty in the trading environment, food price deflation and price reductions". |
| "Broadly we sold the same amount of stuff last year, just at lower prices," he told BBC Radio 5 live. | "Broadly we sold the same amount of stuff last year, just at lower prices," he told BBC Radio 5 live. |
| He said the sales figures also reflected the trend of more frequent and local shopping, with its convenience business growing 16% in the quarter. | He said the sales figures also reflected the trend of more frequent and local shopping, with its convenience business growing 16% in the quarter. |
| Christmas Eve marked Sainsbury's biggest trading day in its convenience stores, with sales totalling £8m. | Christmas Eve marked Sainsbury's biggest trading day in its convenience stores, with sales totalling £8m. |
| The third quarter was also its biggest Christmas for online sales, with the chain delivering 110,000 orders in the three days to 23 December. | The third quarter was also its biggest Christmas for online sales, with the chain delivering 110,000 orders in the three days to 23 December. |
| Its clothing business also performed well, with sales up 10% year-on-year. | Its clothing business also performed well, with sales up 10% year-on-year. |
| Christmas jumpers were the stand-out performer, with sales doubling compared with last year and a snowman jumper proving its most popular design. | Christmas jumpers were the stand-out performer, with sales doubling compared with last year and a snowman jumper proving its most popular design. |
| Price wars | Price wars |
| The figures come a day after Sainsbury's said it would cut the prices of 1,000 of its most popular products as part of a £150m programme announced in November. | The figures come a day after Sainsbury's said it would cut the prices of 1,000 of its most popular products as part of a £150m programme announced in November. |
| Rival Asda announced similar plans on Tuesday, saying it would invest £300m in the first quarter of 2015 on cutting prices. | Rival Asda announced similar plans on Tuesday, saying it would invest £300m in the first quarter of 2015 on cutting prices. |
| The plans mark the latest salvo in a bitter price war as the "big four" supermarkets, which also include Tesco and Morrisons, battle for customers. | The plans mark the latest salvo in a bitter price war as the "big four" supermarkets, which also include Tesco and Morrisons, battle for customers. |
| A combination of increased competition from discounters Aldi and Lidl and customers shopping around for bargains mean none of the big four are expected to report an increase in like-for-like sales over the Christmas period. | A combination of increased competition from discounters Aldi and Lidl and customers shopping around for bargains mean none of the big four are expected to report an increase in like-for-like sales over the Christmas period. |
| Attention will now shift to Tesco and Marks and Spencer, which will both issue trading updates for the Christmas period on Thursday. | Attention will now shift to Tesco and Marks and Spencer, which will both issue trading updates for the Christmas period on Thursday. |
| Phil Dorrell, director of retail consultancy Retail Remedy, said the third quarter numbers highlighted "the challenges facing Sainsbury's and the rest of the big four". | Phil Dorrell, director of retail consultancy Retail Remedy, said the third quarter numbers highlighted "the challenges facing Sainsbury's and the rest of the big four". |
| "Focusing overly on price could damage the reputation for quality Sainsbury's has built up over the years. It can't afford to cut corners on quality, it's not in a position to make many workforce savings, and it's no Asda, so either the suppliers have got to play ball or margins are going to be squeezed." | "Focusing overly on price could damage the reputation for quality Sainsbury's has built up over the years. It can't afford to cut corners on quality, it's not in a position to make many workforce savings, and it's no Asda, so either the suppliers have got to play ball or margins are going to be squeezed." |