Sainsbury’s has recorded a 2% increase in like-for-like sales excluding fuel in the second quarter driven by own brand, convenience and online. Retail Week rounds up the City’s reaction.

“UK like-for-like (excluding fuel) was reported at 2% for the second quarter (16 weeks to 28 September), in line with our estimate of 1.7% and consensus of around 1.8% (according to the company). This is a clear step up from the 0.8% reported in the prior quarter and a good performance in consideration of the tough comps (2012 Paralympic Games sponsorship) and Sainsbury remains well ahead of peers.” - Chris Chaviaras & Claire Huff, Barclays Research

“Sainsbury’s has added another positive like-for-like sales quarter, making 35 since the fourth quarter of 2004/5, and this highlights the polarisation in the UK grocery market, with the quality own brand operators like Sainsbury’s and Waitrose growing ahead of the market and the value orientated discounters, like Aldi and Lidl, growing faster at the other end, while the mid-market brands of Tesco, Asda and Morrisons are all underperforming. Sainsbury’s Local convenience stores, especially in City locations, are still growing sales at +20% with strong like-for-likes of +4%.” - Mike Dennis, Cantor

“Against tough comparatives last year, when its Paralympics endorsement led to strong traction, this outperformance is rooted in balanced investments that differentiate its brand convincingly beyond price. Sainsbury’s investment in own label is notable, with a re-launch of its mid-tier by Sainsbury’s range complemented by ongoing innovation around its Taste the Difference label. It also continues to invest in fresh food merchandising, its close relationships with farmers helping it retain control of quality, amid the backdrop of horsemeat scandal, while playing to increasing demands for home-grown produce. Sainsbury’s also carefully balances quality with affordability.

“Considering the squeeze on the mid-market, Sainsbury’s is outperforming its big four competitors, enjoying a gradual march on market share. But challenges exist. Price rivalry among the Big Four is intense, impacting on margins and, compared to the likes of Tesco, Asda, and Morrisons, Sainsbury’s UK coverage is more skewed towards London and the South East, meaning its customer base has been under less pressure; as it expands, its offer will most definitely become more price-sensitive.” - George Scott, Conlumino