SAINSBURY’S sparked fears of a “perfect storm” for the supermarket sector after posting a big slowdown in sales.
The UK’s third biggest supermarket chain said fourth quarter like-for-like sales rose by 1% excluding fuel – but implied an underlying fall of 1% when VAT is stripped out and an even bigger decline after food price inflation.
Experts warned that underlying negative sales growth was here to stay across the sector as customers cut back on shopping in the face of tax hikes and spending cuts.
Sainsbury’s shares slumped by 6% – while its sales disappointment put “big four” rivals Tesco and Morrisons under pressure.
The slowdown in sales for the 10 weeks to March 19 marked a sharp reversal of the 3.6% growth seen in the previous quarter and was half the level expected in the market.
Retail analysts at Evolution Securities warned the figures showed “the impact of a perfect storm on the sector”.
They said: “With the consumer facing falling disposable income, sales are being spread more thinly.
“The UK has never seen sustained negative like-for-like sales across the industry before, but economics and mathematics suggests that his will be the new norm for the foreseeable future.”
Justin King, chief executive at Sainsbury’s, said the retailer had seen “customers manage their spending carefully” as shoppers buy less in their big weekly shop.
He said the group was surprised by the “significant step-down” in spending, with the usual bounce back in February failing to materialise after a subdued January.
“People are waiting to get paid to see how much they’ve got to spend,” he said.
Rocketing petrol prices – up 16% in the quarter – have been the most significant dent in customer finances, according to the group.
