Sainsbury’s today reported a 0.8% rise in like-for-like sales in the first quarter against a tough market. Retail Week summarises the City’s reaction the results. 

“While representing the grocer’s weakest like-for-like performance in over three years, when put into context this is another strong update from Sainsbury’s. Like-for-like growth has been delivered against tough comparatives – with the same period in 2012 coinciding with the Jubilee – and, more importantly, against wider market trends, with the grocer continuing to outperform key rivals: Morrisons and Tesco. Investment in its well-balanced brand proposition continues to have strong traction among hard-pressed British consumers in a polarised market.

“Sainsbury’s is getting a number of things very right. Most notable has been investment into own-label architecture, which has afforded it authority to flex its offer in accordance to broadening consumer demands and capabilities.

“When viewed in context, despite more subdued like-for-like growth, this performance can only be seen as providing further evidence in favour of Sainsburys’ current strategic focuses. While Morrisons and Tesco are both investing heavily to turn around their fortunes, the real short-term threat to Sainsbury’s will continue to come from the discounters at one end and Waitrose at the other. In response, it is important that Sainsbury’s continues to be proactive in widening its appeal, strongly leveraging private label and investing in creative promotional investment.” – Joseph Robinson, Conlumino

“If you take out the benefit of 0.2% from store extensions, the 0.6% underlying growth is exactly the same as the 0.6% growth reported on the same basis for the first quarter a year ago, despite the spin about tough comparisons with the Jubilee last year. Of course, if you take out the growth from Online and convenience stores, the like-for-like sales would be negative, but the ebullient chief executive Justin King will no doubt point out on the conference call with analysts that Sainsbury’s competitors would be even more negative on this basis… and that industry conditions remain pretty challenging.” – Nick Bubb, independent analyst

“It is not so often that we are so far out in our expectation for trade and whilst we may have misread the pattern in recent weeks, the magnitude of the slowdown in trading momentum from Sainsbury’s in its four quarter (when like-for-like sales were 3.6%) is startling to our minds. On a two year basis, Sainsbury’s first quarter like-for-like sales are 2.2% vs. 6.2% in its fourth quarter. As such, the differential in trading performance between Sainsbury and Tesco quarter-on-quarter, noting the different time periods covered, has narrowed materially. Whilst Tesco’s first quarter update was poor, this update from Sainsbury perhaps makes it appear a little less galling, noting as we do that ‘JS’ is still gaining market share.

“Beyond the headline figure Sainsbury has spoken of a ‘tough consumer environment’and an expectation of ‘the challenging economic environment to continue through this financial year’.Such an expectation can only be deemed to be highly cautious to our minds, albeit supportive of management’s relatively conservative expectation of 1-1.5% full year like-for-like sales as set out in its May preliminary results. Such a narrative reflects a genuinely tough market for the ‘Big Four’ where deep-discounters (Aldi and Lidl) and premium players gain share at the margins whilst convenience and online encroach into mainstream superstore territory too.” – Clive Black, Shore Capital

“Sainsbury’s still has the upper hand against its rivals in Britain’s supermarket wars. Despite recent turbulence in the grocery sector, hit hard by the long winter and horsemeat scandal, Justin King has managed to increase sales, at a time when competitors have seen figures decline.

“Sainsbury’s has maintained a strong relationship with its customers, expanding its own-brand food and Tu clothing ranges, whilst adding to its strong portfolio of Sainsbury’s Local convenience stores. Further growth in this area will help Sainsbury’s continue to power ahead of its rivals.” – Dan Coen, Zolfo Cooper