Supermarket chain Sainsbury’s has blamed ‘cautious customer spending’ following the announcement that the company had a sharp fall in sales in Q3.
Falling general merchandise sales in the 15 weeks to 5 January offset slight growth in the core grocery division, leading total retail sales (excluding fuel) down 0.4%. On a like-for-like basis, that represents a slightly worse-than-expected 1.1% decline.
The shares in Sainsbury’s fell 2.1% following the announcement.
George Salmon, Equity Analyst at Hargreaves Lansdown commented: “Sainsbury’s results are disappointing. Like-for-like sales are stalling and the relentless rise of the discounters means Sainsbury’s market share is under pressure despite its best efforts to hold prices down. All the while, the general merchandise division, recently beefed up by the acquisition of Argos, is suffering the same pitfalls as other non-food retailers.
“While there’s little Christmas cheer in these numbers, Sainsbury’s investors could yet get a delayed present if the CMA approves its proposed tie-up with Asda. CEO Mike Coupe expects savings and synergies to boost profits by at least £500m, and it won’t have gone unnoticed that Asda looks to have had a pretty good Christmas.
“Still, if the merger with doesn’t go ahead, it’s hard to see meaningful growth in sales and profitability.”