Sainsbury's first-quarter sales fall amid deflation and price competition

• Sainsbury’s like-for-likes fall 2.1% in first quarter
• Ecommerce operation gains traction with record sales week
• Boss Mike Coupe hails grocer’s “resilience” amid “challenging” market

But chief executive Mike Coupe insisted the grocer is showing “resilience” amid what he called “challenging market conditions,” as stiff competition from discounters Aldi and Lidl continues to drive down prices and margins.

Total retail sales for the 12 weeks ending June 6 were down 0.6% excluding fuel and 2.3% including fuel. The results, which mark Sainsbury’s sixth consecutive quarter of like-for-like sales decline, come a month after it reported a £72m full-year loss for the year ending March 14.

But Coupe said volume and transactions “continue to grow”, driven by “improved value and further investments in quality”.

Sainsbury’s revealed in its strategic review in November that it would invest in the quality of 3,000 products and Coupe said he had been “encouraged by some of the early trends” in trading.

The grocer’s ecommerce operation has continued to gain traction after experiencing a record week of 256,000 orders during the quarter. It comes after Sainsbury’s unveiled plans to launch click-and-collect services across 100 stores, with 20 of those sites now up and running.

Coupe said Sainsbury’s is “on track” to have the target number of 100 sites open by the end of the year.

The grocer also opened 10 new convenience stores during the 12-week period. Sainsbury’s c-store business remains in “double-digit growth,” it said.

Coupe said: “Trading conditions are still being impacted by strong levels of food deflation and a highly competitive pricing backdrop. These pressures, including the effect of our own targeted price investment, have led to a fall in like-for-like sales for the quarter. We outlined in our Strategic Review in November some of the key actions we would be taking to remain competitive in this environment and are encouraged by some of the early trends that we are seeing in our key trading and operational metrics.

“Despite the challenging market conditions, we are confident that we are building on strong foundations and making good progress with our strategy. We continue to invest in our broad range of products and services and our multiple channels to market. These areas represent strong future growth opportunities and contribute towards our resilience in the current trading environment.”