Sainsbury’s has reported its first sales fall in nine years after like-for-likes excluding fuel tumbled 3.1% in the fourth quarter.

Sainsbury’s had been the only one of the big four grocers to maintain growth in recent quarters.

The grocer reported that total sales in the 10 weeks to March 15 fell 1.5%, which Sainsbury’s boss Justin King said reflected tough comparatives.

King said the figures the previous year reflected the horsemeat crisis, which Sainsbury’s emerged from unscathed and so benefited from a sales bounce, and the later timing of Easter and Mother’s Day.

He also said unseasonable weather in the period affected sales.

However King was confident Sainsbury’s would outperform in the current year.

King said: “We have seen a decline in sales in the quarter reflecting tough comparatives. We are pleased, however, that market data shows we have maintained market share at 17%.

“The market is now growing at its slowest rate since 2005, with falling food inflation in particular benefiting customers.

“Although some economic indicators are showing an improvement in the health of the economy, we expect the outlook for customers to continue to be challenging for the coming year. We remain confident that our differentiated offer will allow us to outperform our peers in the year ahead.”

Sales climbed 15% at Sainsbury’s convenience arm, which notched up for the first time one million transactions in a day. Sainsbury’s is opening two new Local stores every week and is ravamping existing shops to improve the fresh food offer.

Online sales increased 6%, “reflecting a reduction in marketing while the new customer website is launched”, said King. The work is 80% complete and is due to finish in April.

Sales of own brand products have continued to do well, with penetration now at 51% compared with 47% for the market, King said.

“Our own-brand products are, on average, 20% cheaper than a branded equivalent and are supported by the values that our customers expect of us,” said King. “

We recently lowered the price of our milk, bread and eggs, but continue to pay a fair price to farmers through our Dairy Development Group. Customers continue to tell us they recognise the uniqueness and value for money of our own-brand ranges.”

A strong performance at the general merchandise and clothing business was driven in particular by menswear, which was up 23%.  Sainsbury’s has introduced a new general merchandise and clothing format into 53 stores, and another 26 are planned for the first quarter of the new financial year.

The grocer acquired Lloyds Banking Group’s shares in Sainsbury’s Bank in the quarter. King said he expects the bank “to become an increasingly important part of the value that customers receive from Sainsbury’s, and another driver of customer loyalty”.

Sainsbury’s opened 1 million square feet of new space over the year, including 22 convenience stores during the quarter.  Over the 12 month period Sainsbury’s opened 13 new supermarkets, 91 convenience stores and six extensions. It also refurbished 54 stores.


Analysis: Are the good times over for Sainsbury's and the food sector?