Sainsbury’s sales fall as shoppers grapple with the cost of living crisis

J Sainsbury Plc kept its full-year earnings guidance unchanged, although it warned that rising inflation means pressure on household budgets will increase.

The UK’s second-biggest supermarket chain stuck to its full-year guidance of adjusted pre-tax profit of £630m-690m ($764m). The grocer’s comparable sales, excluding fuel, fell 4 percent in the first quarter, according to a statement Tuesday. That was better than analysts expected.

Sainsbury’s shares were up more than 1.5 percent as of 9:32 a.m. in London.

The supermarket said in April normal shopping habits would resume after lockdowns ended, even as consumers began to feel the pressure of rising inflation. Sainsbury, which controls about 15 per cent of the UK grocery market and employs 189,000 people, is cutting costs across the business to keep prices down where possible.

Sainsbury said it will invest more than £500m over two years to keep product prices down as “customers watch every penny and every pound”. The supermarket chain is the same-priced discounter rival Aldi on 240 products.

“Our inflation rate is lower than our competitors and we are priced stronger than ever,” Chief Executive Officer Simon Roberts said at a media briefing.

Roberts said Sainsbury has a “balanced choice” as it works with suppliers to limit costs and keep products in stock. This follows Kraft Heinz Co. temporarily halting supplies of most of its products, including ketchup, to Sainsbury’s rival Tesco Plc last week in a row due to price hikes.

According to Roberts, Sainsbury’s petrol prices are also competitive with competitors and independent fuel distributors.

“We were the first to pass on the cut in tariffs the day it happened,” Roberts said. “We’re doing everything we can to be as competitive as possible and we’ve always done that and we continue to do that.”

Sainsbury faces a challenge at its annual meeting later this week from a group of more than 100 shareholders who want it to accredit itself to the Living Wage Foundation, a lobby group, by the middle of next year. If the vote goes through, it would mean future pay rises at Sainsbury might need to be in line with the foundation’s assessment of a “real living wage”.

Roberts said Sainsbury had already paid staff real living expenses and was the first major grocer to do so, the statement said.

“We truly believe that as a company, we should make the decisions about how we pay our colleagues,” Roberts said at the media briefing. “We do not believe it is right to base the decision on an unaccountable third party.”

The grocer also said chief financial officer Kevin O’Byrne is stepping down and being replaced by Blathnaid Bergin, currently director of trade and retail finance.

Sainsbury’s may have posted better-than-expected sales, but it still underperformed Tesco for the quarter, said William Woods, Bernstein’s European food retail analyst. Sainsbury’s sales fall as shoppers grapple with the cost of living crisis

Fry Electronics Team

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