By Tapan Panchal
J Sainsbury PLC (SBRY.LN) on Wednesday posted a third successive
quarterly decline in sales and warned on its second-half sales
performance, amid stiff competition among U.K. supermarket
chains.
The figures will come as sobering news for new Chief Executive
Mike Coupe, who took over in July from Justin King, who had been
CEO for 10 years. Mr. King is credited with overseeing nine years
of unbroken growth, though the end of his tenure was marked with
two final quarters of negative same-store sales.
Sainsbury is trying to boost flagging sales amid a challenging
U.K. retail environment, where discount chains Aldi Stores Ltd. and
Lidl UK GmbH are forcing the U.K.'s larger supermarkets to cut
prices to retain customers. Sainsbury has responded to the
competition by lowering prices on thousands of products and teaming
up with Danish discounter Netto to open Netto stores in the
U.K.
"In the second quarter, our performance has been impacted by the
accelerated pace of change in the grocery market, including
significant pricing activity and food price deflation in many
areas," Mr. Coupe said in his first trading statement for the
company.
The chain has retained its No. 3 position, behind Tesco PLC and
Wal-Mart Stores Inc's Asda, with a market share of 16.6%, according
to Kantar market data for the 12 weeks ended July 20. Kantar
monitors the household grocery purchasing habits of 25,000
representative households in the U.K.
In mid-morning trading in London, the company's shares were
trading 4.8% lower at 240 pence each. Year-to-date shares are down
nearly 39%.
For the 16 weeks to Sept. 27, the supermarket reported a 2.8%
fall in same-store sales, excluding fuel. Total quarterly sales,
excluding fuel, declined 0.8%. In the first half of the year, it
posted a 2.1% fall in same-store sales, excluding fuel.
"These [challenging] conditions are likely to persist for the
foreseeable future and we now expect our like-for-like sales in the
second half of the year to be similar to the first half," Mr. Coupe
said.
Previously, Sainsbury expected fiscal 2015 sales to grow
0.2%.
Shore Capital analysts have provisionally downgraded their
full-year pretax profit forecast by 17% to 650 million pounds
($1.05 billion) on the sales performance and second-half guidance.
The brokerage last week predicted Sainsbury to report a 3.5% to
4.0% fall in second-quarter same-store sales and a 1.5% to 2.0%
fall in total sales. The forecast was for sales excluding fuel.
Sainsbury's weak performance follows the announcement of a
full-scale investigation being conducted by the U.K.'s Financial
Conduct Authority at Tesco in relation to overstatement of
profits.
On Sept. 22, Tesco suspended four senior executives and called
in outside auditors and legal counsel to investigate a GBP250
million overstatement of its first-half profit forecast. The issue
involved the early booking of commercial income and delayed booking
of costs, triggering a third profit warning in three months.
Ian Walker contributed to the article.
Write to Tapan Panchal at tapan.panchal@wsj.com
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