Sainsbury’s to beat forecasts despite falling sales

The chain posted a 1.1% drop in like-for-like second-quarter sales, excluding fuel – its seventh quarter of falling sales in a row.

Coupe has previously said he expects like-for-like sales to be negative in the full 2015-16 year.

The group now expects full-year profits to be “moderately” ahead of the £548m expected in the City, although this is still a sharp fall from the £681m reported the previous year.

Like-for-like retail sales for the second quarter were down 1.1% excluding fuel and also down 3.3% including fuel.

However, a recent Kantar report showed Sainsbury’s was alone among the Big Four not to have lost market share to the German discounters. We introduced improvements to the taste and texture of our juice ranges and improved the ripeness and quality of our avocados.

Sainsbury’s shares, which have been struggling over the past year, soared by the most since 2009 on the results, rising by 11.8 per cent at pixel time.

The supermarket has turned towards having lower regular prices, and reducing the amount of special offers it gives.

Mike Coupe, chief executive of Sainsbury’s, said: “Whilst the market is clearly still challenging, with food deflation impacting many categories, we are making good progress on delivering our strategy”.

“Year-to-date we have traded well, with both sales and cost savings ahead of expectations”.

And fewer promotions mean there are fewer “demand surges” for products, making supply chain management (the boring but vital part of the business) more efficient and cheaper. Profits are likely to be down.

Sainsbury’s just revealed that sales fell again as it continues to battle against low prices from upstart grocers such as Lidl and Aldi.

Analysts at Bernstein Research suggested that the big rise in the shares was due to the more upbeat tone in the statement.

“Quite apart from the ferocity of the competition, Sainsbury’s is up against food deflation, changing consumer trends and margin pressure”, he added.

“It has tried to take a cautious message up to now, that it will go “toe to toe” with whatever price investment anyone else makes”.

Sainsbury’s clothing sales grew by almost 13pc in the last quarter, buoyed by a “back to school” campaign that saw it sell 640,000 pairs of boys’ pants.